The Competition and Markets Authority (CMA) is set to launch an investigation into the merger of Greencore and Bakkavor.

The deal was agreed in April, valued at £1.2bn, to create a convenience food business with a combined revenue of approximately £4bn.

Following the combination, Bakkavor shareholders would own 44% of the company, with shareholders of the Irish food firm holding 56%.

The regulator said it is determining whether the merger is expected to result in a "substantial lessening of competition" within any market in the UK for goods and services.

Before launching phase one of its investigation, the CMA has invited comments from any interested parties. The regulator is yet to confirm a date for the investigation, with comments being accepted until 22 July.

Investment analyst at AJ Bell, Dan Coatsworth, said that the investigation could throw a "spanner in the works" of the merger.

He added: "The UK competition authorities have been quite interventionist in recent times but the modest share price reaction suggests investors are not overly worried about the destiny of the transaction just yet.

"The combination will create a dominant player in prepared food products, serving nearly all the big UK supermarkets. Grocers may be among the interested parties who respond to the CMA’s request for comments on the tie-up.

"The market may well keep its powder dry until the 22 July deadline for responses, at which point it may become clear if a formal investigation is going to be launched."

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