There will be continued consolidation in the food industry this year, but reduced access to finance means a growing proportion of firms may opt for mergers rather than takeovers, according to financial adviser Grant Thornton.
Nevertheless, the pressure to appease banks was likely to drive larger players to sell some non-core assets, although 'habitual acquirers' such as Premier Foods and Bakkavör were no longer in the market to buy them, said Phil Jackson, corporate finance partner at the firm. "These sort of businesses no longer have access to additional bank debt to finance acquisitions and raising money on the stock market is not an option."
Other disposals had also stalled due to reduced purchaser appetite and lower offer prices, notably Premier Foods' attempts to sell RF Brookes and Avana Bakeries, added Jackson.
There were just 101 deals in the sector in 2008, compared with 132 in 2007.