Welcome to the second edition of Bite Size Dealtracker which focuses on merger and acquisition (M&A) and equity market activity in the food, beverage and agribusiness industry during the 3 and a half year period from 1 July 2014 to 31 December 2017. Our previous Bite Size Dealtracker (first edition) covered the 3 and a half year period to 30 June 2014.
"It’s pleasing to see the industry continue to grow as Australian food, beverage and agribusiness assets are perceived as high quality and are able to translate well into different overseas regions.
Given the size of the Australian M&A market in comparison to other countries, Australia accounts for a proportionally large share of global M&A transactions."
- Cameron Bacon, Corporate Finance Partner
Key insights for the Australian Food, Beverage & Agribusiness industry
Strong deal activity
Total M&A deals across the globe have increased by 8.8% to 2,801 since the first edition which reported 2,575 deals. Not only are global deal volumes stronger as time goes on, but also the deal transaction multiples are increasing.
Australia continued to rank fifth in the world for M&A deal activity. The top 10 global deals during this period are shared between acquisitions of US and UK based businesses. No Australian transactions made this list.
There has been significant IPO activity in Australia and throughout the Asia Pacific region. Australia ranks third for Global IPOs with a total of 16 IPOs and 2 of those making the Top 10 Global IPOs.
Continued flow of overseas acquirers
We are continuing to see interest from overseas purchasers, particularly from China, Hong Kong, the UK and the US, as Australian brands strengthen and become more reputable in international markets.
Foreign buyers continue to acquire larger mid-sized businesses and are willing to pay healthy multiples to secure premium strategic assets, pushing up transaction prices. Asia Pacific investor interest continues to increase as there is a growing demand from the rising Asian middle class.
Activity in the private equity market
Private Equity firms accounted for 17% of overall transactions and are targeting mid-sized Australian businesses, particularly in the packaged foods & meats sub-sector, as they look to leverage premium brands, intellectual property and distribution channels into new markets across the Asian Pacific and other global regions.
Private Equity was involved with a number of the Top 10 Global Deals and the Top 10 Australian Deals.
We expect investor interest in the industry to continue to grow as Australian food, beverage and agribusiness assets are perceived as high quality and are able to translate well into different overseas regions. As new sector trends unfold we expect to see continued M&A activity take place in Australia’s craft brewing and agriculture sectors including "free-from" and "paddock to plate" options.
Also the shift towards healthy and alternative food options continues to develop across the entire industry as the population becomes more health aware and educated about food intake and origin.