Pending EU exit fails to slow industry deals

By Rod Addy

- Last updated on GMT

Brexit may cause some investors to hold off on further deals for a time
Brexit may cause some investors to hold off on further deals for a time
Food industry merger and acquisition (M&A) activity in 2018 remained unhampered by the UK’s pending exit from the EU, with the overall volume of deals up on the previous year.

That’s according to Oghma Partners’ latest report on M&A agreements in the sector. There had been 86 deals with officially confirmed values in the past year, versus 81 in 2017, the paper stated.

However, it speculated that a no-deal Brexit could ultimately cause buyers and sellers to back off from deals for a time. “Indeed, as we enter the first quarter of 2019, there is some anecdotal evidence of sellers holding off.”

Even without a no-deal scenario, the pace of M&A could fizzle out, the report claimed. “Looking into 2019, it’s possible that we could see a repeat of 2017, where the impact of the Brexit referendum vote took some months to impact the level of deal activity, but ultimately led to a 28% decline in activity compared with 2016.”

Overseas investors

The total value of last year’s transactions was at its lowest level since 2011, down from £4bn to £2.6bn, but the number valued at over £100m reached its highest level since 2015, Oghma Partners added. Investment from overseas investors accounted for 37.2% of total deal volume for 2018, a proportion that was slightly down on the previous year.

The single most significant transaction was Luigi Lavazza’s takeover of Mars Drinks UK for £499m, which was announced on 1 October, according to Oghma Partners.

Other confirmed triple-figure deals noted by the company Included: Nomad Foods’ £210m acquisition of Aunt Bessie’s – made public on 4 June; Archer Daniels Midlands’ £185m purchase of Probiotics International – revealed on 29 June; and Valeo Foods’ £100m acquisition of Tangerine Confectionery – announced on 11 August.

The report also mentioned Agrial’s acquisition of cider producer Aston Manor, which was rumoured to be worth £100m, although the value remains officially unconfirmed.

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