Food M&A Insights 2007

PricewaterhouseCoopers Food Insights provides an overview of M&A in the European food manufacturing sector during 2006, with analysis and comment on the market’s principal trends, driving forces and outlook for 2007. In addition to our annual M&A analysis, this year's edition explores several topical issues within the food sector, such as the impact of pensions liabilities upon transactions, the rise in functional and medical foods and the effects of capacity on production.

Acquirers found much to get their teeth into in the food sector in 2006 with the total value of food deals in Europe reaching €10.6bn. Deal volumes remained constant although intense margin pressures and capacity considerations continued to drive consolidation, particularly in the mid-market.

Outlook for 2007:

• The food sector M&A market will remain robust despite the continuing competitive pressures on manufacturers. M&A will continue with consolidation driven by capacity imbalances.
  
• Nutrition and health claims will have to be supported by ‘generally accepted scientific data’ in accordance with new EU regulations.
  
• Local sourcing and seasonality will become more important at the premium end of the food market as will other eco-aspects such as bio-fuels and soya production.
  
• Private Equity funds are active in all food sectors and if current debt multiples are maintained it is likely there will be a continued flow of deals helping sector multiples remain high.
  

With a team dedicated to the food sector, PwC Corporate Finance is well-placed to identify industry trends and to assist clients – particularly those in the highly-active middle market – in applying the most effective corporate strategies. If you would like further information or have any comments, please do not hesitate to contact one of the team.

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