M&A activity makes a comeback as Carlsberg and Newlat lead surge of deals

Carlsberg’s takeover of Britvic drove a surge in M&A among British food and drink companies this summer as economic conditions continued to improve, a new report has found.  

Deal volumes from May to August grew 32% year on year with 49 transactions completed, according to corporate finance firm Oghma Partners.

The £3.5bn acquisition of Britvic, along with Newlat’s purchase of Princes for £700m in May, took the total value of all deals to £6bn.

Yet despite the activity of these fmcg giants, smaller deals dominated the landscape with around two-in-three transactions valued at £10m or less. Only seven deals exceeded £50m. 

Grocery and confectionery were the most active categories, representing a quarter of all deals, including Groupe Menissez’s acquisition of Village Bakery.

There were also notable petfood acquisitions, said Oghma, such as Butchers Pet Care’s sale to Inspired Pet Nutrition and Petbuddy Group’s purchase of Thrive Pet Foods.

Mark Lynch, a partner at Oghma Partners, said that while there may be a further flurry of deals ahead of the government’s budget at the end of October due to concern over a possible increase in capital gains tax, the long-term impact of such a tax rise could be restrictive. 

“It remains unclear whether any [tax] increase will take effect immediately or in the new tax year, 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,” he said. 

“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.”