M&A activity returns as Carlsberg and Newlat gain ground

A new report shows that Carlsberg’s takeover of Britvic has triggered a surge in mergers and acquisitions among UK food and drink companies this summer as economic conditions continue to improve.

According to corporate finance firm Oghma Partners, deal volume from May to August was up 32% year-on-year, with 49 deals completed.

The £3.5 billion takeover of Britvic, along with Newlat’s £700 million purchase of Princes in May, took the total value of all deals to £6 billion.

However, despite the activities of these fmcg industry giants, smaller deals dominated the landscape, with around two in three deals valued at £10 million or less. Only seven deals exceeded £50 million.

The most active categories were grocery and confectionery, which accounted for a quarter of all deals, including Groupe Menissez’s acquisition of Village Bakery.

Oghma said there have also been significant pet food acquisitions, such as the sale of Butchers Pet Care to Inspired Pet Nutrition and the purchase of Thrive Pet Foods by Petbuddy Group.

Mark Lynch, partner at Oghma Partners, said that while there may be another wave of deals ahead of the government’s budget in late October amid concerns over a possible capital gains tax hike, the long-term impact of such a tax hike could be restrictive.

“It is unclear whether any (tax) increase will take effect immediately or in the new fiscal year of April 2025. If it is the latter year, we could see a rush to market in the coming months as business owners They will try to accelerate their exit plans to take advantage of current rates,” he said.

“However, in the longer term, the number of transactions may decline due to less favorable sales conditions and higher premiums required to close transactions under increased tax rates.”