Mergers and acquisitions in UK food and beverage sector highest since 2019, but with fewer large deals

Oghma Partners research presents a significant rise in the level of M&A deals in the UK food and beverage market.

Acquisitions from administration​

But while the volume of deals is high, some of the circumstances in such deals suggest that the picture is more complicated.

For example, 27% of the deals are acquisitions of companies in administration (an increase from 14.9% in T1). According to Oghma Partners, this could be caused by the rising costs of raw materials and increasing cost of debt, as well as some shrinking markets.

For example, the acquisition of Meatless Farm by VFC Foods and of Plant & Bean by Heather Mills, the company which produces VBites.

After the flurry of start-ups in the plant-based sector in its infancy, this trend suggests that the meat market is shrinking, with more brands flocking to fewer corporate hands.

Smaller deals and bolt on deals​

While there were a high number of deals, there were comparatively few high value deals. In fact, while 75% of deals were worth £10m or less, only 8.1% were worth £50m or more, well below the five-year average of 13.9%. Deal value has seen a slight recovery, but remains low.

This, suggested Oghma Partners, could have something to do with economic uncertainty. Until investors know whether or not the UK will enter a recession, they will remain cautious, the firm suggested.

Bolt-on deals (when a business adds another business, usually one that provides a similar service, as an arm of its sales) were high in T2, with drinks company Britvic acquiring Jimmy’s iced coffee, seafood company Eperson acquiring Iceland Seafoods, and Richardson Malting acquiring prepared foods company Ragleth.