Brexit debate

Food firm mergers and acquisitions rise 11%

By Michael Stones contact

- Last updated on GMT

It's a deal: food and drink sector M&As rose by 11% in the first quarter
It's a deal: food and drink sector M&As rose by 11% in the first quarter

Related tags: Coffee, Mergers and acquisitions, Alcoholic beverage, Premier foods, Grant thornton

Food and drink sector mergers and acquisitions (M&A) climbed by 11% in the first quarter of this year, with 51 deals completed, according to business consultancy Grant Thornton.

Deals concluded in the sector during the period were valued at £2.47bn. Of that total, £2.15bn was attributed to the sale of Brakes to Sysco, the world’s largest foodservice supplier.

Excluding the mammoth foodservice deal, the overall total disclosed value of agreements for the quarter was £314M. Only seven deals publically disclosed a value.

Grant Thornton head of food and beverage Trefor Griffith said: “Overall, M&A activity in the sector has shown no sign of slowing with 51 deals completed in this first quarter.

“Although the number of private equity deals has fallen, indicative of the uncertainty in the sector and the broader market, we do not believe there is a lessening of private equity interest to invest and expect activity will pick up as 2016 progresses.”

Cross-border deals fell by 8% this quarter compared with 2015 overall. But a continued appetite for internationalisation was evident, as 12 of the 19 cross-border deals completed involved overseas investment in the UK.

Premier Foods

There was particular interest from Asia with Nissin Foods, taking a 19.9% stake in Premier Foods, and deals between Itochu and Transmar, and Nishimoto Trading and Harro Foods.

Four deals in the soft drinks sector included Rebel Kitchen’s acquisition of raw coconut water brand Unoco.

Also, the Natural Beverage Company acquired the Fairtrade cola manufacturer Ubuntu.

Both deals were said to demonstrate the continued trend in the sector for acquisitions of Fairtrade, natural and perceived ‘healthier’ products.

“Concerns about the new sugar tax have yet to deter investment in the soft drinks sector,”​ said Griffith.

“Uncertainty around the upcoming EU referendum brings with it questions around existing trade negotiations and increased import costs for food and drink firms.”

Could be good news

But since the UK is a net importer of food, in the case of Brexit, the firm predicted an increase in the consumption of British food. That could be good news for British producers, despite the changes arising from a vote to quit the EU on Thursday June 23.

Looking back over the first quarter, Griffith highlighted McCormick’s long-running and ultimately unsuccessful bid for the Mr Kipling manufacturer.

“We have seen some really interesting deals in the last quarter. In the midst of McCormick’s attempt to acquire Premier Foods and being rebuffed three times, Japanese instant noodle maker Nissin Foods was successful in accumulating a stake.

“The partnership gives Premier Foods access to Nissin’s innovative products to distribute in the UK, as well as access to new global markets.”

As the year unfolded, Grant Thornton predicted “more innovative deals”​ from overseas companies would be made regardless of the concerns around the EU referendum and the sugar tax.

Read more about the report here​.

State of the industry survey

What keeps you awake at night? The Food Manufacture Group is running its annual ‘state of the industry’ survey and we would like your help to chart the industry’s​ concerns.

By completing the three-minute survey, you will also be entered into a draw to win £100 in Amazon vouchers.

The results of the survey and the winner of the draw will be published on FoodManufacture.co.uk and in the in the July issue of our sister publication Food Manufacture​.

To complete the survey click here​.

Related news

Show more

Related products

show more

Listeria Management & Drainage: 5 Essential Steps

Listeria Management & Drainage: 5 Essential Steps

Aco Building Drainage | 26-Apr-2019 | Technical / White Paper

Listeria is widely recognised as a universal problem for food and drink manufacturers. To ensure effective listeria management and control, food and drink...

Minimise the impact of product recalls Post-Brexit

Minimise the impact of product recalls Post-Brexit

Epicor | 10-Dec-2018 | Technical / White Paper

The impact of Brexit on current legislation is a topic of much conversation and debate. When it comes to product recalls the uncertainty around what may...

Related suppliers