Last year’s Mergers and Acquisitions (M&A) activity in the UK Food and Beverages market was at the highest rate since 2010, according to a report by finance advisory firm Oghma Partners.
Major drivers of M&A activity in Britain include the plant-based sector, with the Portuguese business group Sonae acquiring the English group Gosh Food, who produces vegan sausages, burgers and falafels, for an enterprise value (EV) of around £64M. Canadian dairy company Saputo were also mentioned for acquiring the Scottish dairy-free brand Bute Island Foods for a significant, undisclosed amount.
Interest in plant-based companies is expected to remain a major trend in 2022, as food giants start to make space for greater vegan choices in their portfolio.
Valuations in the plant-based sector however are expected to see some pressure in the future. In 2021, Oatly shares value dipped by nearly 60% after its IPO launch in May. A similar dip was also experienced by plant-based meat producer Beyond Meat, which could affect future valuations in the sector, according to the report.
Acquisitions in the UK’s Direct-to-Consumer market were also plentiful in 2021, with Nestlé making a deal to take over SimplyCook, which follows on from their acquisition of a majority stake in the healthy recipe box service Mindful Chef back in 2020. Italian pasta producer Barilla also became a majority shareholder of London-based group Pasta Evangelists in 2021.
Some of the highest value deals occurred in the animal-based protein sector, including Canada giant Sofina Foods, which acquired pork and seafood producer Eight Fifty Food Group for a whopping £1.2B, as well as American company Pilgrim’s Pride’s acquisition of Kerry‘s Meats and Meals business for £704M.
The report anticipates 2022 will be a challenging time for businesses with costs for distribution, energy, labour and raw materials predicted to be extremely high. These issues are expected to negatively impact companies that already find it difficult to reduce their costs or figure out their pricing strategies.