The firm’s Bitesize report found the number of deals involving overseas investors increased to 32% of all transactions in 2016, representing a continued rise from the levels seen in 2014 (20%) and 2015 (28%).
Asian investors accounted for 19% of all overseas buyers last year, up from 11% in 2014 and 13% in 2015.
Japanese investors had a particular interest in the UK. The largest transaction of the fourth quarter of 2016 was Japanese company Sumitomo’s acquisition of Irish fruit distributor Fyffes.
Decline of 8%
Deal activity in the food and beverage sector in 2016 had remained strong, with quarter four of 2016 seeing 48 transactions completed – bringing the total for the year to 198. This was a decline of 8% compared with 2015, which saw 215 food and beverage transactions.
The total disclosed value for deals in the last three months of 2016 was £2.2bn, a significant increase compared to the previous quarter which recorded £575.6M. Total disclosed deal value for 2016 stood at £8.4bn, a 22% drop compared with 2015’s total of £10.8bn.
Head of food and beverage at Grant Thornton Trefor Griffith said the findings showed 2016 had been a solid year for mergers and acquisitions activity in the food and beverage sector.
“Despite seeing a fall in both the number and the total disclosed value of deals compared to last year, 2016 is still the second busiest year in terms of activity that we have seen since 2007,” said Griffith.
‘Level of uncertainty’
“Given the level of uncertainty in the market this year amidst the EU referendum – which appears to have prompted the slight dip in transactions in the second quarter – this strong result once again displays the robust nature of the sector.”
The depreciation of sterling following the result of the EU referendum vote had made UK businesses more attractive to overseas investors, with UK assets now around 20% cheaper for overseas buyers, added Griffith.
“Unsurprisingly we have seen the UK's decision to leave the EU be a dominant feature of 2016. With the shape of negotiations still unclear and the prospect of a 'hard Brexit' increasing, the only real certainty is more uncertainty,” he said.
“The sector has performed strongly throughout the last year despite this on-going uncertainty and – as we have seen increased levels of investment from both overseas and private equity buyers – it is clear that interest in the food and beverage sector remains.”
Meanwhile, boosting US investment in the UK food industry was the aim of a trade mission taking place this week.
Investment in UK food and drink firms – at a glance
- 32% of all transactions in 2016 involved overseas investment
- Asian investors accounted for 19% of all overseas buyers in 2016
- 198 deals made in 2016 – 48 in quarter four
- Total disclosed deal value for 2016 stood at £8.4bn