Food and beverage M&A activity at highest since 2010
UK food and beverage M&A market activity was at its highest since 2010 this summer.
Deal value between May and August, was at an estimated £3.9bn, according to corporate finance house Oghma Partners’ latest report.
The year-to-date total value of recorded deals are estimated at £5.8bn – the nearest annual total was that 2015’s figure of £5.6bn.
One of the largest deals was the sale of food business Valeo Foods to private investment firm Bain Capital in May.
Valeo’s portfolio of food brands includes Jacobs, Rowse, Kettle, Odlums, Barratt, and Balconi.
Another huge deal was US multinational Pilgrims Pride’s £704m acquisition of Kerry’s ready meals and meats business.
Stocks Spirits Group also topped the list of deals after it was purchased by Sunray Investments through private equity firm CVC for £767m earlier this year.
Overseas buyers have not lost their interest in UK businesses, as evident from Ferrero’s acquisition of Burton’s Biscuits and Newlat’s acquisition of Symington’s.
If current rates of activity continue, deal volume should recover to pre-pandemic levels in 2021.
However, Oghma Partners warned that like-for-like deal volume comparators get tougher given the recovery seen in deal volume in the final period of last year.
Cost pressures across labour, energy, raw material and distribution also make for a challenging trading environment.
Oghma Partners said the business model of many companies would be tested over the next year.
Businesses that struggle to reduce costs would find the prospect of a business exit more challenging, the company added.