Food and beverage M&A activity increased by close to a third in the UK in the second quarter of 2024, rising by 32.4%, new data from corporate finance house Oghma Partners has found.
According to Oghma Partners, the estimated deal value rose to around £6.0 billion (€7.2 billion) in the period, driven by a number of large-scale deals, including Carlsberg/Britvic, Carlsberg/Marston's, and Newlat/Princes.
Total Deal Value
If these sizeable deals are excluded, the total deal value in the quarter stood at £580 million (€696 million), in line with previous Q2 periods.
Around three fifths (61.2%) of deals were valued at £10 million (€12 million) or less, with only a handful of middle to higher market transactions, Oghma Partners noted. Just 14.3% of the deals exceeded £50 million (€60 million).
The grocery and confectionery segment was the most active, accounting for 24.5% of total volume in the quarter.
“Looking ahead, the short to medium term outlook is largely positive," commented Mark Lynch, partner at Oghma Partners. "We expect deal volume to continue at these levels supported by improving economic conditions. The potential for further rate cuts by the BoE this winter should provide buyers, particularly financial buyers, with more opportunities to pursue M&A activity."
'Flurry Of Activity'
According to Lynch, the market should see a "flurry of short term deal activity" ahead of the Government's budget announcement at the end of October, due to concerns over any potential increase in capital gains tax.
"What remains unclear is whether any increase will take effect immediately or in the new tax year, April 2025," he added. "If it's the latter, we could see a rush to market over the coming months as business owners seek to accelerate their exit plans to benefit from current rates.
"However, in the longer term, deal activity could decline due to less favourable selling conditions and the higher premiums required to close deals under the increased tax rates.”
