© Mike Mozart
Food and beverage companies are continuing to consolidate their businesses in order to “future-proof themselves” in an increasingly competitive environment, according to Grant Thornton.
Its quarterly research found 37 mergers and acquisitions involving British or Irish targets or acquirers during the first three months of 2015 – a similar level of activity to that recorded in the four previous quarters. The undeniable highlight was the merger between Heinz and Kraft, which we reported was set to create the fifth largest food and drinks company in the world back in March.
Grant Thornton also claimed that there was “a drastic reduction” in the number of deals with publicly disclosed values, suggesting the majority of transactions were conducted between small- to medium-sized businesses “where there is a tendency for the deal financials to remain behind closed doors”.
Grant Thornton partner and head of food and beverage Trefor Griffith said: “Brands are under pressure and producers are responding by taking a hard look at their businesses, both for the potential to become more efficient, but also to look at new routes to market and whether they have the right mix in their portfolios to be competitive in today’s harsh environment.
“Portfolio optimisation, which involves companies both rationalising the size of their portfolios and also acquiring new, often faster growing businesses continues to be one of the key investment themes driving M&A activity in the food and beverage sector.
“Examples of this are currently to be found mostly at the larger end of the market. For example Nestlé, which has already divested its Spanish La Cocinera frozen meals business to Findus, is seemingly also nearing the sale of frozen food unit Davigel to Brakes. Other groups also undertaking portfolio optimisation include Unilever, Kerry Foods, and 3G Capital with Heinz, and no doubt the newly formed Kraft/Heinz group.”
© FoodBev Media Ltd 2020