The number of M&A deals in the UK food and beverage sector soared by 29% in 2024, according to a new report from London-based advisory firm Oghma Partners.
There were 151 transactions last year, Oghma Partners said, compared to 117 in 2023.
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Across the UK food and beverage market last year, Carlsberg’s acquisition of UK soft-drinks group Britvic stood out as the big-ticket deal. However, excluding that transaction, Oghma Partners said the cumulative value of deals struck in the sector rose by approximately 31% to £2.7bn ($3.32bn).
Another major deal included Italy-based Newlat Food signing a deal to acquire UK food-and-drinks company Princes from Japan’s Mitsubishi Corp. for £700m in May.
In the third tertial of the year, there was a 25.5% increase in deal volumes, with 59 transactions compared to the same period in 2023, Oghma Partners said.
Smaller transactions dominated the landscape, with 68.9% of deals valued at £10m or less, albeit a slight decrease from 75% in 2023.
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By GlobalDataOnly 9% of deals exceeded £50m, falling below the five-year “historic” average of 14%.
According to Oghma Partners said, geopolitical and economic uncertainty significantly impacted M&As and company valuations in 2024.
The persistence of high interest rates was one of the most significant factors impacting valuations, while the increased cost of debt constrained companies from securing affordable financing for acquisitions.
The reduced competition for assets ultimately exerted downward pressure on valuations, the report said.
Oghma Partners partner Mark Lynch said: “While inflation and interest rate policies continue to affect valuations, M&A activity remains strong in terms of volume, primarily driven by smaller deals and distressed assets. The sector’s resilience, shown by its response to the Ukraine conflict and post-pandemic challenges, suggests deal-making will persist.
“Companies with strong supply chains and exposure to high-margin markets are key targets. Despite pent-up demand from private equity, current activity favours value driven opportunities over large-scale deals. While larger deals may take time to return, buyer interest is there, with many preparing to deploy capital as the right opportunities emerge.”
Foreign buyers played a reduced role in 2024, accounting for 21.9% of deal volume, down from 23.1% in 2023 and the five-year average of 27.4%, the report said.
Financial buyers also pulled back, contributing 12.6% of deals compared to 18.8% the previous year.
Distribution was the most active category, making up 23.2% of total deal volume, with notable activity in the first and third tertials of the year.
The food ingredients sector remained “highly attractive” for M&A due to “diverse end markets, sticky customer relationships, and high margins”, Oghma Partners said.
