UK Food and Beverage M&A activity has seen a 68.2% increase in the volume of deals (37 transactions) compared with the same period in the prior year, according to Oghma Partners’ Food and Beverage M&A report.
Deal value has also increased by 49.1% to c. £400.0m compared with the same period the prior year.
However, while there has been a recovery in deal value, the report revealed that this has been from a very low base and the overall quantum value of transactions remains low.
Oghma said that a challenging funding and trading environment with the added uncertainty of whether, or not, the UK will dip into recession provides the economic backdrop.
These factors have manufactured a “significantly less favourable environment” for larger transactions with over 75.0% of deals having an estimated value of £10.0m or less as there was a significant absence of middle to higher market deals during the period, similar to T1 2023 (c. 80.0% of deals had an estimated value of £10.0m or less).
Only 8.1% of transactions were estimated to be above the £50.0m mark, falling well below the five-year historic average of 13.9%.
Meanwhile, overseas buyers were responsible for many of Tertial’s deals, accounting for 24.2% of deal volume, which is in line with 2022 at 25.0%.
The number of deals with a financial buyer increased compared with T2 2022, with 27.3% of buyers a financial buyer compared to 9.1% in T2 2022.
Additionally, equivalent to T1, the beverages sector was the most active with several niche producers changing hands. There were multiple deals in the beer market; with Breal Capital acquiring two microbreweries in Brew by Numbers and Black Sheep Brewer.
The report also suggested that the chilled food space has been particularly active, this tertiary comprising 21.6% of transactions compared with only 2.0% to the same period in the prior year and 6.1% in T1.
Notably, chilled ready meals manufacturer Oscar Mayer was acquired by Pemberton Asset Management and fresh ingredients supplier Freshcut Foods was acquired by Flywheel Partners
Mark Lynch, partner at Oghma Partners, said: “The resilient and defensive characteristics of the food and beverage M&A sector can once again be seen with T2 deal volume at its highest level since 2019 despite the relentless market challenges. Whilst there has been a recovery in deal value, this has been from a very low base and the overall quantum value of transactions remains low.