Food and beverage M&A rises 29 per cent in 2024

M&A activity in the UK’s food and beverage industry continued its upward trajectory last year, with a new study showing a 29 per cent increase in deal volume compared to the levels recorded in 2023.

According to the report from Oghma Partners, there were 151 transactions in the sector last year, a near-30 per cent increase from 117 in 2023. M&A activity in the food and drink sector has been on the rise for years now and the trend shows few signs of ending.

Activity has been driven by trends including distressed acquisitions and the strength of sub-sectors including alcoholic beverages and confectionery, helping to boost dealmaking despite numerous headwinds.

2024 also saw an increase in deal value. Excluding the year’s major outlying transaction – Carlsberg's £3.3bn acquisition of Britvic – total deal value in the sector increased by 31 per cent compared to 2023 to reach £2.7 billion.

However, the report also showed that smaller transactions continue to dominate the sector’s M&A landscape. According to Oghma Partners, ongoing geopolitical and economic uncertainty continued to hit valuations and M&A activity during 2024.

Persistently high interest rates were among the main factors impacting valuations, while rising debt costs made it challenging for companies to secure affordable acquisition financing, resulting in reduced competition and subsequently applying downward pressure on valuations.

Smaller deals – those valued at £10 million or less – comprised 68.9 per cent of deals in 2024, a slight decrease from 75 per cent in 2023. However, just 9 per cent of deals exceeded the £50 million mark, some way short of the five-year average of 14 per cent.

Oghma Partners partner Mark Lynch commented: “While inflation and interest rate policies continue to affect valuations, M&A activity remains strong in terms of volume, primarily driven by smaller deals and distressed assets. The sector’s resilience, shown by its response to the Ukraine conflict and post-pandemic challenges, suggests deal-making will persist.”

“Companies with strong supply chains and exposure to high-margin markets are key targets. Despite pent-up demand from private equity, current activity favours value driven opportunities over large-scale deals. While larger deals may take time to return, buyer interest is there, with many preparing to deploy capital as the right opportunities emerge.”

Notably, the report also showed a reduced level of activity among overseas buyers. While inbound M&A has been one of the key features of UK dealmaking over recent years, overseas buyers have been more cautious when targeting the UK food and beverage market.

This continued during 2024, with Oghma Partners reporting that foreign buyers accounted for 21.9 per cent of deal volume, compared to 23.1 per cent in 2023 and a five-year average of 27.4 per cent. Activity among financial buyers also fell from 18.8 per cent in 2023 to just 12.6 per cent last year.

Find out more:
Food and beverage M&A on the rise in tough conditions

Also see: Global and UK Food & Beverage M&A Insight - members can also access our comprehensive list of the world's leading private equity buyers of food & beverage brands.

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