Investing.com -- Shares of food manufacturing firm Bakkavor Group PLC (LON:BAKK) edged up by 0.6% following the announcement of a binding agreement to sell its China operations to Lihe Xing (Qingdao) Food Technology Co. Ltd, a subsidiary of Lihoo’s (Qingdao) Food Industry Company Ltd.
The sale, expected to close in the second half of 2025, is anticipated to net the company a profit of approximately £15 million, considering the carrying value of the China net assets was £39 million.
The transaction is seen as a strategic move for Bakkavor, as the company’s operating profit forecasts for 2026 are set to increase to 5.7% upon the exclusion of the China segment.
Analysts had previously accounted for approximately 5.5% of the Group’s 2026 revenue to come from China, equating to around £130 million, but this only contributed roughly 0.4% to the Group’s adjusted operating profit.
Analysts at RBC called the deal a positive development for the company, noting that it aligns with expectations.
The move is expected to bring the company closer to its medium-term margin target, indicating a strategic repositioning that could pay off in the coming years.