Mergers and acquisitions — trends in the food and beverage sector

By Craig Hodgson

Mergers and acquisitions (M&A) activity in 2013 in the food and beverage sector followed 2012 as another year of high-profile transactions, although, at least in the UK, on a reduced scale. According to a report by Oghma Partners, the numbers of transactions fell from 87 in 2012 to 76 in 2013, with overseas buyers accounting for 25 per cent of all transactions. M&A activity in 2013 displayed similar themes to those shown in 2012, being driven at least in part by an appetite for brands from private equity funds and trade buyers, especially from the Far East.

As a firm, we experienced first hand the interest from the Far East for heritage brands when we acted for management on the sale of a stake in Weetabix to Bright Food of China. In 2013, UK heritage brands, in particular, have once again attracted interest from Far Eastern manufacturers. Suntory Group purchased Ribena and Lucozade for £1.35bn — the largest deal in the sector in the UK in 2013 — and showed again the international appeal of UK heritage brands.

By exploiting acquired brands, international owners aim to leverage additional sales among the expanding and increasingly affluent middle classes in developing markets — thereby growing visibility, marketability and sales. But some peculiar issues are emerging in relation to these overseas acquisitions of well-known UK brands, such as increasing levels of resistance from domestic politicians, consumers, industry commentators and in some cases regulators, who are concerned about the loss of know-how, local decision making, heritage and, potentially, jobs…

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