Carlsberg acquisitions lead M&A activity for Q2 2024

03-Oct-2024 - Last updated on 03-Oct-2024 at 08:44 GMT

M&A business up: Q2 has proved stronger than the same period last year (credit: Getty/mohd izzuan)

Mergers and acquisitions (M&A) deals have increased by almost a third in the food & beverage sector for the second quarter of 2024 versus the same period last year – with the Carlsberg-Britvic and Carlsberg-Marston’s deals cited as key.

According to the latest UK Food and Beverage Sector M&A report from corporate finance advisory firm Oghma Partners, deal volumes in Q2 2024 rose by 32.4% year-on-year, as 49 transactions completed.

The estimated deal value surged to about £6.0bn, primarily driven by a few large deals such as Carlsberg-Britvic, Carlsberg-Marston’s and Newlat’s acquisition of food manufacturer Princes.

Excluding these, the deal value was closer to £580.0m, in line with previous Q2 periods.

It was smaller deals that dominated the landscape, with 61.2% valued at £10.0m or less, while mid-to-large market transactions were scarce.

Largely positive outlook

Only 14.3% of deals exceeded £50.0m, half of which surpassed £100.0m. UK corporate buyers led the market, accounting for 57.1% of deal volume (28 deals), a slight increase from 54.1% in Q2 2023.

Financial and overseas buyers contributed 22.4% and 20.4%, respectively. The grocery and confectionery sector was the most active, representing 24.5% of total volume.

However, the beverages sector remained strong, highlighted by Carlsberg’s acquisitions of Britvic and the Marston’s brewing side of the Carlsberg Marston’s Brewing Company business.

Mark Lynch, partner at Oghma Partners, said: “Looking ahead, the short to medium-term outlook is largely positive.

“We expect deal volume to continue at these levels supported by improving economic conditions. The potential for further rate cuts by the Bank of England this winter should provide buyers, particularly financial buyers, with more opportunities to pursue M&A activity.

Potential capital gains tax hike

“We are also likely to see a flurry of short-term deal activity ahead of the Government’s Budget announcement at the end of October, as business owners are concerned about a potential increase in capital gains tax.

“What remains unclear is whether any increase will take effect immediately or in the new tax year beginning April 2025.

“If it’s the latter, we could see a rush to market over the coming months as business owners seek to accelerate their exit plans to benefit from current rates.

“However, in the longer term, deal activity could decline due to less favourable selling conditions and the higher premiums required to close deals under the increased tax rates.”