Julian Wild, food group director at the UK’s Rollits Solicitors in York, which handles mergers and acquisitions on behalf of clients, told FoodNavigator: “There has been a remarkable amount of activity, although not too many deals are being done at a lower level. There has been a dearth of deals in the £5m-£10m range.”
He cited the continuing talks with a view to acquiring frozen foods maker Iglo Group, in which several private equity and trade buyers had emerged as interested parties. He referred to the proposed merger between Arla and Milk Link announced in May and Weetabix’s takeover by China’s Bright Foods, also revealed in May as further examples.
Other instances included the sell-off of Premier Foods’ brands, the latest of which involving Elephant Atta was announced on July 6.
Further examples included Greencore’s acquisitions in the US market, including fresh food manufacturer Schau in June and Marketfare Foods in April.
Greencore’s offloading of its Minsterley chilled desserts operation in June to Müller Dairy was yet more evidence of the activity Wild was speaking about.
In the meat industry, Cranswick announced its purchase of Milton Keynes-based manufacturer Kingston Foods earlier this month, said Wild.
However, he expressed surprise that so many smaller firms were not being bought as a result of getting into difficulties. “I’m surprised there haven’t been more casualties given how difficult trading conditions are out there.”
Commenting on other reasons why fewer smaller UK food and drink businesses were not falling under the hammer, Wild said: “Vendors are clearly not rushing to sell in the current climate, banks are not lending in the way they say they have been and a lot of businesses have been struggling for the kind of growth you would be looking for prior to a sale.”
Many of the deals that were taking place were being driven by necessity, said Wild, with Premier Foods needing to offset its debt and Milk Link linking up with another big dairy firm to gain more clout. Private equity buyers were also looking to secure good value deals in the current tough economic climate.
Referring to the recent flurry of financial deals in the food industry, one analyst told FoodNavigator: "Many of the mid-tier [food industry] players are taking the opportunity to strengthen themselves against competition, increase efficiency and buying power and seize companies that otherwise might have far higher price tags."