Food and Beverage sector mergers and acquisitions comment – January 2009

Dato

There are no prizes for guessing what will dominate the Food and Beverage M&A Market in 2009. To paraphrase Bill Clinton, ‘It’s the economy stupid’.

Food Sector Mergers & Acquisitions dried up completely in November and December 2008 and only two deals were reported in January 2009, one of which was out of an Insolvency process.

It is likely that activity will slowly pick up in 2009, but with a different dynamic to that seen over the past few years. The old model of Private Equity buying assets as an investment opportunity is now less likely, driven by the caution of Investment managers combined with the banking squeeze. The most likely drivers of M&A activity during 2009 are those businesses in distress needing to take action to survive, and the need for manufacturers to take a critical eye to their portfolio to determine which assets are fundamental to their survival, and which they can do without. There remains a number of categories which are fragmented to make consolidation a realistic value opportunity, and these are likely to generate some M&A activity in 2009.

Deals completed in the UK

FishWorks bought out of Administration by Boparan Ventures. FishWorks, the restaurant chain and fishmonger has been acquired by Ranjip Boparan through his investment company Bopraran Ventures. FishWorks, founded in 1984 by chef Mitch Tonks, had 10 restaurants in southwest England and London, as well as a delivery service in Brixham, Devon. Boparan acquired the best performing assets including, one site in Richmond, Surrey, two in central London and the original site in Bath. Marija Simovic, a 20-year veteran of the food industry, has been hired as the new chief executive.

Associated British Foods acquired Azcarera Ebro for €385million. Associated British Foods plc, the listed international food ingredients business has acquired Spain and Portugal’s leading sugar producer Azcarera Ebro for 385m euro. The consideration is to be in cash with 20m euro of the payment deferred over two years. Azcarera Ebro supplies some 50% of the 1.6million tonnes of sugar consumed in Iberia. The acquisition will strengthen ABF’s existing European operations.