Food & Drink M&A to boomerang in 2010

Peacock - "M&A recovery will be seen in 2010"

Catalyst Food & Drink sector expert Simon Peacock has predicted a significant recovery in M&A in the sector as 2010 progresses.

Speaking at events organised by the ICAEW Corporate Finance Faculty in London & Birmingham in early May, Peacock outlined the severity of the fall in M&A work in the sector in 2009 before detailing his thoughts as to why the sector would show significant recovery in 2010.

"People do not realise quite how deep the fall has been in what most see as a defensive sector, and one generally more resistant to sudden steep declines. Our research gives me the facts that in 2009 there was an overall fall of more than 50% in global Food & Drink M&A, a fall that was even steeper in the mid-market in which I specialise" said Peacock.

Continuing he said, "This was even more surprising given the resilience of other factors at play in the market. Food inflation for example has remained at sensible levels (only 1.3% in February 2010 alone, the lowest since 2006), some food commodity indexes actually fell in 2009 (Palm Oil for example), and indeed the sector was the only UK sector to increase output in Jan 2010 (up to levels similar to 2005)".

"Amongst all of this change though, some factors have remained constant. International acquirers remain interested in UK acquisitions (be they Kraft or Heineken, Nutrixo or Vion), private equity funds remain cautiously optimistic about the sector, and as the year continues the UK Food and Drink industry has remained robust and is showing early signs of recovery. I'm therefore confident that M&A activity will boomerang back into motion as the year continues, and judging by my own workload in the sector I'm going to be kept pretty busy this year!"

For more on the ICAEW Corporate Finance Faculty see here.