Food & drink sector – a buoyant transactions market?

Featuring David Armstrong | 27th February, 2019

From information available on the Experian Market IQ website, there were 138 transactions announced in 2018 where the acquired or target company was based in the UK and involved in food & drink manufacturing and/ or processing. This compares with 147 using the same criteria for 2017. 

This represents a 6.5% drop in the volume of food & drink related transactions whereas the total number of transactions across all sectors grew by 3.0% across the same period.  [Source: PKF Francis Clark South West Corporate Finance Review 2018.] There appear to be no obvious reasons for this slight drop off in the number of food & drink transactions – and is not something that we evidenced during the year.

Headline transactions across the UK during 2018 included:

  • Aunt Bessie’s (famous for its Yorkshire puddings and roast potatoes) being sold by William Jackson to Nomad Foods;
  • Midland’s-based cider producer Aston Manor being acquired by French-based Agrial SCA;
  • PepsiCo acquiring Pipers Crisps; and
  • Brewdog (the punk craft brewer brand) raising £26m of development capital towards its future plans.

During 2018 we were proud to have been involved a number of transactions in the sector; including:

  • The sale of St Ives-based County Confectionery to Norwegian–owned Orkla ASA (see link for further details); and
  • Investment in DB Foods by BGF.

As we head into 2019, we are assisting an increasing number of food & drink companies with their future plans, whether this involves a partial or full exit and disposal or, particularly for those companies with brand strength, securing growth capital to help them achieve their aims.  

Looking forward to 2019, in the overall transaction sector we see:

  • Increasing interest from overseas buyers – although not in the food & drink sector, the first three disposals we completed this year were to buyers from Europe and Australia.
  • Increasing threat to the current capital gains tax regime and the 10% entrepreneurs’ relief.
  • Continued proliferation of funding – whether mainstream debt or equity funding or, increasingly from both the challenger banks and the ‘peer to peer’ sector.

From a food & drink sector perspective, our thoughts on 2019 include continuing interest in transactions involving:

  • UK manufacturing facilities, particularly from overseas acquirers;
  • Premium branded product; and
  • Concepts such as ‘free from..’ and the snacking sector.

I am sure that 2019 will contain even more challenges than last year; so long as funding is widely available and appropriate deal structuring is carried out, with expert advice entrepreneurs will still be able to acquire, grow or realise value from their businesses in a risk-managed way.

2019 started with Unilever announcing it has acquired Graze, the UK’s leading healthy snacking brand and just last week it was announced Dairy Crest has been acquired by Canadian company Saputo. 

Will your company be included in the transactions statistics for 2019?

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