M&A deals to remain strong in 2015

By Nicholas Robinson contact

- Last updated on GMT

Nearly 50 firms were involved in M&A activity in 2014, according to the new report
Nearly 50 firms were involved in M&A activity in 2014, according to the new report

Related tags: United biscuits, Business, Mergers and acquisitions, Sales

More than £20.2bn was exchanged in food and drink business mergers and acquisitions (M&As) in 2014, according to figures from Catalyst Corporate Finance (CCF).

At least 46 UK firms had been involved in M&A activity during the year, which was dominated by sales of small to medium-sized enterprises (SMEs), compared with last year, which saw more sales of larger companies, said Simon Peacock, head of food and consumers at CCF.

“The sale of United Biscuits​ [for £2bn] in November was one of the few sales involving a large business this year,”​ he said. “Not everyone expected the sale of United Biscuits, but it was possibly the largest business sold this year.”

The sale of the former Blackstone and PAI Partners-owned United Biscuits, which was sold to Turkish food firm Ulker Biskuvi Sanayi in November, could be a sign of things to come for UK firms looking to sell, claimed Peacock.

More likely to target

Buyers from countries other than Europe and the US, which are most interested in UK-based businesses, were now more likely to target UK-based firms, he said.

“If you look back two years ago, China’s Bright Food came for Weetabix​ [for £1.2bn] and that was the first Chinese buyer of a large, British staple business,”​ he added. “It’s likely we’re going to see more of the same in the coming years.”

Other notable activity included Premier Foods’ s £87.5M joint venture with the US-based Gores Group at the beginning of the year; Wellness Foods-owned Rowse Honey to Valeo Foods, which was for an undisclosed sum; and the sale of United Spirits’s Whyte and Mackay to the Alliance Global Group for £430M, he said.

Meanwhile, a lack of activity involving Boparan Holdings, the parent company of the food giant 2 Sisters Food Group, this year surprised Peacock: “I thought we might have seen more from Boparan, because of the disruption in the business throughout this year and last year.”

The processor has had a year of mixed activity, which included factory closures, hundreds of job losses and more than £163M in costs and charges, which increased its debt.

Year ahead

Although surprised at Boparan’s lack of M&A activity this year, Peacock was unsure whether to expect any in the coming months. “It’s not listed on the Stock Exchange, so it’s hard to have an understanding of the business.”

In the year ahead, M&A activity was expected to remain steady, driven by overseas buyers’ interest in strong UK brands.

Equity investment in SMEs would also be a characteristic of business in 2015, Peacock predicted. “A couple of big sales this year gave shareholders money to spend and you would expect some of that to be invested back into strong businesses next year.”

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