UK F&B merger and acquisitions activity in 2021 was highest for 11 years

31 Jan 2022 --- A new report from Oghma Partners reveals UK Food and Beverage M&A market activity in 2021 was at its highest since 2010. The analysis provides an overview of key themes in notable mergers and acquisitions that took place last year, which include boosted activities in the plant-based sector and direct-to-consumer sales channels. 

In the last four months of 2021, the UK F&B sector saw a total deal volume amounting to 29 transactions. Compared to 2020, this value was up by 50.8% to 89 transactions.

“The total deal value for T3 2021 was estimated at £722.1 million [US$970.8 million],” the report reads. “This boosted the 2021 annual deal value to an estimated £6.6 billion [US$8.9 billion], which is the largest annual deal value we have recorded since 2010.”

The appetite from financial investors remained strong throughout 2021, in volume terms they accounted for 20.7% of total deal activity compared to 20.3% in 2020.

“Driving this activity is the relative defensiveness of the sector’s cash flows, combined with loose monetary policy, which has led to an inflow of funds into private equity companies as well as a low cost of debt,” the analysts remark.

Overseas buyers had another active year, accounting for 39.1% of total deal volume. Interestingly, this was the highest percentage of non-UK corporate buyers involved in UK F&B deals since 2010.

Key themes of 2021
In 2021, Oghma Partners noted there was a wave of activity in the plant-based F&B mergers and acquisitions space. Notable activity during the period included Portuguese conglomerate, Sonae, acquiring the UK producer of vegan sausages, burgers and falafels Gosh Food.

Last year also saw Canadian dairy giant, Saputo, acquire the dairy alternative cheese producer, Bute Island Foods for an undisclosed amount.

While buyer demand for plant-based F&B companies remains high and so do valuations, Oghma notes that the 2021 sell off in Oatly shares (IPO in May 2021) and Beyond Meat (IPO May 2021) following disappointing revenue numbers could impact valuations in the sector moving forward.

Boom in direct-to-consumer channels
Another sub-sector within the UK F&B industry that was particularly active was thedirect-to-consumer (D2C) channel. Major food companies were keen to expand into this area as was seen with Nestle’s acquisition of SimplyCook. 

This deal followed on from their acquisition of the healthy meal kit provider, Mindful Chef at the end of 2020.

Further activity in the space included Italian pasta giant, Barilla, acquiring a majority stake in D2C meal kit start-up Pasta Evangelists, an acquisition that represents a new step in Barilla’s international growth strategy.

Despite the increased popularity of plant-based products, the protein space was particularly active with most of the the higher value deals for the year attributed to this subsector Notable deals included Sofina Foods, one of Canada’s largest food producers, acquisition of Eight Fifty Food Group, the business behind Karro Food Group and Young’s Seafood, for £1.2 billion (US$1.6 billion).

In the same year, Pilgrims Pride strengthened its position in the global protein market by acquiring Kerry’s Meats and Meals business (valued at £704 million, US$946.5 million).

Edited by Benjamin Ferrer