M&A activity in food and beverage sector at its highest in over a decade

The mergers and acquisitions (M&A) market activity in the UK food and beverage sector in the four-month period to end of August has been at its highest in over a decade, a new report has shown.

According to the latest report from corporate finance house Oghma Partners, deal value in this period, touching an estimated £3.9bn, is the largest total recorded since 2010. The year-to-date total value of recorded deals are estimated at £5.8bn, and the nearest annual total was that of £5.6bn in 2015.

“At the current rate of activity, 2021 should see deal volume recover to pre-pandemic levels and in line with the long-term average. However like for like deal volume comparators start to get tougher given the recovery seen in deal volume in the final period of last year,” the report said.

As the trading environment gets more challenging, with cost pressures popping up in several directions such as labour, energy, raw material or distribution costs, the report said the next twelve months will be a further test of the business models of many companies.

“Weaker businesses that struggle to get pricing through and/or reduce costs will find the prospect of a business exit more testing under these conditions,” it added.

The three largest deals in the period were the sale of Valeo Foods to Bain Capital, the purchase of Kerry’s ready meals and meats business by Pilgrims Pride and the purchase of Stocks Spirits Group by Sunray Investments.

The period also demonstrated that overseas buyers have not lost their appetite for UK businesses, Ferrero’s acquisition of Burton’s Biscuits and Newlat’s acquisition of Symington’s being two examples.