Bakkavor Group PLC on Friday said it has completed the sale of its China operations, Bakkavor China Holdings Ltd, for ¥509 million, or $50 million.
The London-based supplier to the food service industry and retail customers said the sale was made to Lihe Xing Qingdoa Food Technology Co Ltd, which is wholly-owned by Lihoo’s Qingdao Food Industry Co Ltd.
As of June 28, the carrying value of the assets being sold was around £32 million, and Bakkavor expects to record a net profit on disposal of at least £18 million. This will be used to reduce leverage, the company said.
‘After more than two decades in China, we are incredibly proud of the business we have built...We are confident of the business’s continued success under Lihoo’s ownership, benefitting from their local expertise as it embarks on the next phase of its growth journey,’ said Chief Executive Officer Mike Edwards.
‘The group’s strategy remains clear, and the exit from China enables us to sharpen our focus on our core business and support the delivery of our medium-term margin target.’
Bakkavor targets a 6% margin over the medium-term. This reached 5.0% in 2024, up from 4.3% in 2023.
In May, Bakkavor agreed in principle to a takeover offer from UK peer Greencore Group PLC. The cash and shares offer values each Bakkavor share at 200 pence and the company as a whole around £1.2 billion. The Competition & Markets Authority on Tuesday said it was considering an enquiry into the takeover.
Shares in Bakkavor were marginally higher at 217.50 pence in London on Friday morning. The stock has risen 41% over the past year.
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