Latest research from financial adviser Grant Thornton UK reveals that there were a total of 26 cross-border deals announced involving a UK or Irish acquirer and/or target.
This represented more than half (55%) of the 47 deals completed in the first quarter of 2019.
By comparison, 44% of the total deals completed in 2018 were cross-border, the findings showed.
Overseas origin
As many as 40% per cent of the buyers of UK and Irish targets were of an overseas origin in Q1 2019 compared to 27.8% overall in 2018.
Domestic deal activity dipped for the first three months of the year with 21 deals on home territory, representing 45% of the total, the analysis found.
In 2018, domestic deals accounted for 56% of 209 transactions throughout the year.
The figures also revealed that the 47 total deals announced in Q1 2019 represented a fall of 19% on the preceding quarter’s deal volume (58 deals in Q4 2018) and compared with 43 total deals announced in Q1 2018.
This was consistent with the trend for M&A deal volume to be subdued in the first quarter of the year, Grant Thornton UK said.
The total disclosed deal value for Q1 2019 resided at £1,672 million - across 14 deals - which was strongly boosted by the £975 million takeover of Dairy Crest by Saputo Inc. of Canada, the research suggested.
Heightened cross border activity
“When we released the findings of our sector deal analysis at the end of 2018 our view was that overall appetite and rationale to undertake M&A in the F&B sector remained strong, with Brexit acting as a catalyst for heightened cross border activity,” Trefor Griffith, partner and head of food and beverage at Grant Thornton UK LLP said.
“The data from Q1 this year continues to support this. However, whilst the immediate threat of a no-deal Brexit has been postponed, food and drink businesses continue to operate in a highly uncertain environment. We have seen several potential overseas buyers pull out of sales processes to acquire UK assets, citing Brexit as the reason.”
Griffith added there was anecdotal evidence of a “significant increase in the number of business owners seeking partial exits or cash out deals.”
Brexit uncertainty
“This is reflective of the ongoing Brexit uncertainty, but more so of the increasingly volatile political environment, which could have impact on capital gains tax as well as the general business environment,” he continued.
“Despite the significant pressures on the industry, companies are continuing to innovate and develop new products and routes to market. Hopefully, when there is more clarity and less volatility in the market, operators will be able to thrive in a less constrained environment and we will see a more significant upturn in M&A activity.”
