Top story
Despite the surprises and shocks 2016 has thrown up - notably Brexit and a Donald Trump presidency - a senior City dealmaker argues that it has been a ‘vintage’ year for food and drink M&A.
Akeel Sachak, global head of consumer at Rothschild, points out that the past couple of weeks alone has delivered four big deals: the $7.3bn deal which saw Asahi buy SAB Miller’s East European brands, a dizzyingly complex £1.8bn purchase of Punch Taverns for Patron and Heineken, a partnership between Sipsmith and Beam Suntory and Coke reaching an amicable divorce from AB InBev in relation to its various Coke bottling assets, including a $3.2bn stake in Coca-Cola Beverages Africa.
2016 also brought mega-deals aplenty, with AB InBev getting its $110bn acquisition of SAB Miller over the line, Danone snapping up Whitewave for $12bn, Bayer’s $66bn bid for Monsanto and Amplify taking over Tyrrells.
”These mega-deals have far reaching consequences for brands and their stakeholders, while at the same time presenting follow-on opportunities for well-capitalised acquirers able to buy previously unattainable assets,” Sachak said.
Looking ahead to 2017, Sachak expects other blue-chip corporates to take a more imaginative approach to managing underachieving businesses and focus on their core.
Read the full, exclusive column here on thegrocer.co.uk/finance.
Morning update
In another exclusive opinion piece for The Grocer, PwC partner Stephen Oldfield asks what do Marmite, Birds Eye fish fingers and Toblerone have in common? He examines the Brexit-driven inflation entering the market and sizes up the opportunities and the risks for 2017. Read the full column here.
The Grocer also has an exclusive on the latest set of accounts for frozen ready meal specialist Cook Trading. The business battled back after “a shaky” first half to once again generate another year of record sales and profits. Revenues jumped 14% to £45.1m in the year to 31 March 2016 thanks to a strong finish in the last five months, including a “fantastic” performance at Christmas as shoppers sought out quality food. Read the full story here.
Finally, The Grocer also has the latest results from Edible Oils. The raging supermarket price war, as the supermarkets battle the discounters to win back customers, has hit sales at the producer behind the Crisp n’ Dry, Mazola and Olivio brands. Revenues at the business fell 4.4% to £186.6m in year to 31 March 2016 – on top of a 6.6% drop in the previous 12 months – as deflation continued to dominate the grocery aisles. The story is here.
And that’s it for 2016 on the finance newsletter. We wish you all a Merry Christmas and a Happy New Year. Join us in the first week of January as we start ploughing through all the trading updates from the supermarkets and fmcg suppliers to analyse who won Christmas 2016. Enjoy.
Yesterday in the City
Another quiet day in the City in the pre-Christmas trading. Booker (BOK), SSP Group (SSPG) and WH Smith (SMWH) all made decent gains, up 2.1% to 172.9p, 2.2% to 385.7p and 1.7% to 1,525p respectively. Hotel Chocolat (HOTC) also climbed back up 4.4% to 277p to make up some of Wednesday’s losses when it fell almost 8%.
The FTSE 100 also nudged up 0.2% to 7,055 points after falls in the morning as investors awaited news on the fate of failing Italian bank Monte dei Paschi.
Fallers in grocery and fmcg were few and far between, with Dairy Crest (DCG) down 0.3% to 605p, Diageo (DGE) down 0.2% to 2,081p and Tesco (TSCO) down 0.2% to 203.8p.
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