Natixis's Dual Play: Decoding a Complex Bet on the £1.2B Bakkavor Deal

LONDON, UK – November 28, 2025 – In the rarefied world of high-stakes merger and acquisition activity, the devil is often in the regulatory disclosures. A recent filing by French financial services giant NATIXIS SA has pulled back the curtain on the sophisticated strategies at play in one of the UK’s largest recent corporate consolidations: the £1.2 billion takeover of fresh food producer Bakkavor Group by its rival, Greencore Group.

A routine Form 8.3 disclosure, filed under the UK's stringent Takeover Code, revealed that NATIXIS executed a seemingly contradictory trade on November 27. The bank purchased 315,343 shares in Bakkavor while simultaneously increasing a short position of the exact same size using a derivative known as a Total Return Swap (TRS). This perfectly balanced maneuver, which leaves the bank with a 0.48% long interest and an identical 0.48% short position, is far from a simple bet on the company’s future. Instead, it offers a masterclass in modern financial engineering and a telling indicator of the perceived risks that still linger around this sector-defining deal.

A Food Giant in the Making

The backdrop for NATIXIS’s intricate positioning is the creation of a new titan in the UK convenience food market. Dublin-based Greencore’s pursuit of Bakkavor has been a dominant theme throughout 2025. After initial proposals were rebuffed early in the year, the two parties reached an agreement in April on a cash-and-share offer that valued Bakkavor at a significant premium. The strategic logic is compelling: combining Greencore’s strength in food-to-go with Bakkavor’s leadership in fresh prepared meals would create a powerhouse with combined revenues approaching £4 billion.

Shareholders from both companies have overwhelmingly approved the merger, signaling strong support for the industrial logic. However, the deal’s final hurdle remains a significant one: regulatory approval from the UK’s Competition and Markets Authority (CMA). In late October, the CMA concluded that the merger could lead to a “substantial lessening of competition,” threatening to refer the deal to an in-depth Phase 2 investigation—a process that can be lengthy, costly, and uncertain.

In response, Greencore proactively offered to divest its chilled soups and sauces manufacturing site in Bristol to appease the regulator. Earlier this month, on November 7, the CMA indicated that it had “reasonable grounds” to believe this remedy might be sufficient, a crucial step forward. With the deal now pending final clearance and expected to close in early 2026, the market is pricing in a high probability of success. Bakkavor’s shares, trading around 229p, are hovering near the implied offer value, a sign of investor confidence. Yet, as NATIXIS’s trade demonstrates, confidence is not the same as certainty.

Decoding the Delta-Neutral Dance

To the uninitiated, buying and shorting the same amount of the same stock looks like running in place. In reality, it is a sophisticated strategy known as a delta-neutral or market-neutral position, designed to profit from factors other than the simple direction of the share price. By holding shares long while being short via a derivative, NATIXIS has effectively insulated itself from the primary risk of Bakkavor's stock moving up or down.

So, what is the play? This is a classic merger arbitrage hedging strategy. The primary risk in any takeover is “deal-break” risk. If the CMA were to unexpectedly reject Greencore’s remedy and block the merger, Bakkavor’s share price would likely plummet from its current deal-inflated level back to its pre-offer valuation. In that scenario, NATIXIS’s long position in the physical shares would suffer a substantial loss. However, its short position, held through the Total Return Swap, would generate a corresponding profit, cushioning or even negating the blow.

The TRS is a powerful tool for this purpose. It allows an institution to gain economic exposure to a security's performance without owning the underlying asset directly, often with greater capital efficiency. By increasing its short position via a TRS, NATIXIS is essentially paying a counterparty a fee in exchange for receiving the cash equivalent of any fall in Bakkavor’s share price.

This strategy allows the bank to participate in the M&A event, perhaps by providing liquidity to clients or engaging in other related arbitrage opportunities involving Greencore's stock, all while surgically hedging the most glaring risk. It’s a calculated, low-volatility approach that seeks to capture value from the deal's mechanics rather than making an outright directional bet.

Transparency and the Takeover Code

This glimpse into a bank's trading book is only possible because of the UK Takeover Code. The Code mandates that any party with an interest of 1% or more in a company under offer must publicly disclose their positions and any subsequent dealings via a Form 8.3. This rule is designed to create a level playing field, preventing insiders or major players from building up influential stakes in secret during a sensitive offer period.

By requiring disclosure of interests held through both direct share ownership and derivatives, the Code ensures the market has a complete picture of a firm’s economic exposure. NATIXIS's filing is a textbook example of this transparency in action. It informs all market participants—from the companies involved to retail investors—that a major financial institution is actively managing its exposure to the deal's outcome with a highly nuanced strategy. This information helps maintain market integrity and allows for more accurate pricing of the risks involved.

A Bellwether for Broader Sentiment

Beyond the technicalities of the trade, NATIXIS's position serves as a bellwether for institutional sentiment. The decision to engage in a hedged strategy, rather than taking a simple long position, speaks volumes. It signals that while the smart money believes the Greencore-Bakkavor deal is likely to proceed, the regulatory risk is still considered material enough to warrant the cost of hedging.

The market’s behavior reflects this cautious optimism. Bakkavor’s stock has remained robust, but it still trades at a slight discount to the full takeover value, a spread that represents the market’s collective pricing of the remaining uncertainty. Greencore’s shares have also performed well, indicating investors believe the synergies and strategic benefits of the acquisition will outweigh the costs of integration and divestment.

Ultimately, the NATIXIS disclosure is more than just a line item in a regulatory database. It is a real-time case study at the intersection of corporate strategy, financial innovation, and regulatory oversight. It reveals how major financial institutions navigate the complex risks of multi-billion-pound transactions, using sophisticated instruments to protect their capital while positioning themselves to profit from the outcome. For investors and executives alike, understanding these intricate financial maneuvers is no longer optional—it is fundamental to navigating the high-stakes landscape of modern corporate consolidation.