The food and drink sector witnessed a significant surge in M&A deal volumes last year, with buyers focusing on undervalued companies to bolster their market positions.
According to Oghma Partners, total deal volume escalated to 151 deals in 2024, marking a 29.1 per cent increase from 117 deals the previous year, as reported by .
Concurrently, the total value of deals rose by 31 per cent. º£½ÇÊÓƵ corporate buyers were responsible for just under two-thirds of the activity, reflecting a 12.9 per cent year-on-year increase, while private equity investment was subdued due to consistently high borrowing costs.
The most substantial deal was Carlsberg’s £3.3bn acquisition of Britvic in July, where Carlsberg paid a total of 1,315p per Britvic share, representing a premium of approximately 36 per cent on its closing price on 19 June. Mark Lynch, partner at Oghma Partners, noted that "Companies with strong supply chains and exposure to high-margin markets are key targets," adding that food and drink firms are particularly appealing due to "diverse end markets [and] sticky customer relationships".
For instance, The Compleat Food Group made three acquisitions in the chilled prepared food sector: SK Chilled Foods, Zorba Foods, and Harvey & Brockless. Similarly, Kitwave expanded in the wholesale sector with two acquisitions: Total Foodservice Solutions for £17m and Creed Catering Supplies for £70.0m.
"Current activity favours value-driven opportunities over large-scale deals," Lynch commented. "Brands with strong leadership and sustainable business models will continue to be attractive, while weaker players may face increased pressure."
Oghma Partners forecasted that the sector will experience "intensified competition" this year, leading businesses to concentrate on "capturing growth and improving efficiency".
"Larger players await greater market stability expected in 2025 [but] consolidation [will] continue as companies seek to strengthen their positions," Lynch added.
In a broader perspective, British M&A activity is anticipated to accelerate this year, as dealmakers gain more confidence following the Budget and US presidential election. Almost half of º£½ÇÊÓƵ corporations foresee an increase in their legal spend in 2025 due to rising demand for legal advice on the subject.
Last October, speculation about potential increases in inheritance, capital gains, and pension taxes ahead of Chancellor Rachel Reeves’ Budget on 30 October caused a slowdown in activity. "Looking forward, now that there is more clarity around the political backdrop and in the context of continued challenges faced by º£½ÇÊÓƵ capital markets, the stage is set for a sustained increase in º£½ÇÊÓƵ M&A activity," Peel Hunt has stated.
Moreover, a less drastic rise in capital gains tax and carried interest than anticipated, coupled with reductions to the Bank of England interest rate, are set to stimulate interest from private equity firms and corporate purchasers.
