Mergers and acquisitions (M&A) led by international players also showed a huge increase on the previous quarter, up 71%, Grant Thornton’s latest Bite Size report suggested.
Top transactions included US-based firm Gores Group paying £30M for a 51% stake in Premier Foods’s bakery business, incorporating its Hovis brand, and US firm Chiquita Brands International acquiring Dublin-based fresh produce wholesaler Fyffes.
The total amount of deals, including investment from UK firms, increased by a third compared with the final three months (Q4) or the first three months of last year, Grant Thornton claimed.
Private equity deals
In the first quarter of this year, the number of private equity deals rose by 50%, compared with the previous quarter, the business and financial advisory firm added.
Examples of such deals included NVM Private Equity’s purchase of a minority stake in UK tortilla chips manufacturer It’s All Good for £3.5M. Key Capital Partners’ sale of TSC Foods, owner of the Glorious! soup brand to Liverpool’s The Billington Group was another instance.
“There’s a whole host of private equity investors looking to invest,” Trefor Griffith, partner and head of food and beverage at Grant Thornton UK, told FoodManufacture.co.uk. “The UK is a relatively safe bet from the perspective of the general regulatory environment.
‘Food safety/standards perspective’
“Likewise from a food safety/standards perspective, it’s fair to say we lead the way in the UK, as opposed to elsewhere, which is more of a risk.”
However, he cautioned uncertainties in the market caused by big changes to the retail landscape, such as the rise of discounters and online retailers, could dampen investors’ spirits.
Activity had been driven partly by bigger manufacturers pruning their collections of brands, getting rid of those not fitting their core objectives, according to the Bite Size report. Unilever’s sale of its meat snacks business, including Peperami in the UK and Ireland, was a case in point, it claimed.
‘Rumours’
Asked whether the current flurry of deals was set to continue, Griffiths said: “That’s a tough one. There are rumours of some fairly large transactions in the offing, but as we all know, those rumours don’t always come to fruition.
“There’s certainly more of appetite from buyers rather than sellers, but judging it on our pipeline, we’ve got more projects on the go by a long way.”
In addition, Grant Thornton said the Bank of England’s persistence in maintaining low interest rates had encouraged prospective investors to invest sooner rather than later. Favourable loan terms, enabling firms to access finance easily, had been another incentive, it added.
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