New data from corporate finance advisory firm Oghma Partners revealed total deal volume rose 29.1% in 2024, with 151 deals taking place compared to 117 in 2023.
Q3 2024 proved the most active period of the year with 59 transactions, a 25.5% increase year-on-year.
The beverages sector not only accounted for a significant portion of deal volumes (20.5%) but also deal values.
Notable M&A included Carlsberg’s £4.1bn takeover of Britvic and acquisition of Marston’s 40% stake in Carlsberg Marston’s Brewing Company for £206m.
Other prominent deals in the food and drink space included Sunrise Alliance Beverage’s acquisition of Gipsy Hill Brewing Company in October 2024 as well as KP Snacks takeover of Whole Earth Food in November last year.
In May last year, Italian agro-food group, Newlat, also acquired food and drink group Princes from Mitsubishi Corporation for £700m.
Squeezed value
Excluding Carlsberg’s Britvic acquisition, deal value grew by approximately 31% to £2.7bn, up from £2.1bn in 2024.
However, smaller deals dominated overall, with 68.9% of M&A valued at £10m or less, down from 75% in 2023. Just 9% of deals exceeded £50m, well below the five-year average of 14%.
Distribution led activity accounted for 23.2% of deals while grocery and confectionery volumes also remained consistently high at 22.5%
The report added UK buyers accounted for 65.6% of the total deal volume during 2024, an increase of 12.9% vs 2023 volumes.
Overseas and financial buyers accounted for 21.9% and 12.6%, respectively, well below their five-year averages of 27.4% and 17.3%.
There was a “lack” of activity from private equity in 2024 due to “persistently high borrowing costs” as higher interest rates “squeezed deal values”, according to the report.
Partner at Oghma Partners Mark Lynch said: “2024 was marked by geopolitical and economic uncertainty, which has impacted M&A activity and company valuations.
“The new Labour Government has grappled with persistent inflationary pressures and stagnant economic growth, while global tensions - such as conflicts in Europe and the Middle East - added further complexity.
Key targets
“One of the biggest challenges to valuations has been high interest rates, which were initially expected to decline in early 2024 but have remained elevated.
“The higher cost of debt has limited the ability of companies to raise affordable financing for acquisitions, leading to reduced competition for assets and, in turn, putting downward pressure on valuations.
“M&A activity in the second half of 2024 was heavily influenced by the October Budget, as sellers anticipated negative changes to capital gains tax.
“This led to a noticeable bunching effect in deal volumes, with 42.3% (25 deals) of Q3 transactions announced in October and 56% of those concentrated in the final three days before the Budget announcement.
“This surge reflected the urgency to close deals before the anticipated tax increases were announced.
“While inflation and interest rate policies continue to affect valuations, M&A activity remains strong in terms of volume, primarily driven by smaller deals and distressed assets.
“The sector’s resilience, shown by its response to the Ukraine conflict and post-pandemic challenges, suggests deal-making will persist.
“Companies with strong supply chains and exposure to high-margin markets are key targets.”
