Moy Park

Moy Park’s scaling up in the protein market dominated its third-quarter results

The protein market dominated deal activity and value in the third quarter as global processing giants sought to increase scale, according to the latest quarterly M&A report by Grant Thornton.

Four key deals were led by the long-awaited £1bn sell off by scandal-hit Brazilian group JBS of Northern Irish poultry processor Moy Park to US-based Pilgrim’s Pride. It was the third time Moy Park has changed hands in the past 10 years.

Elsewhere, pig processor Tulip acquired UK producer Easey Holdings, Peking duck supplier Cherry Valley Farms was snapped up by two Chinese buyers and US conglomerate Cargill entered a joint venture with poultry company Faccenda Foods.

“You have large players in the space driving consolidation globally, some good and some bad: for example JBS has run into trouble in Brazil and that has led to more deals,” said Trefor Griffith, head of food and beverage for Grant Thornton, who compiled the quarterly Bite Size M&A report.

“Protein is dominated by these global players and the sector is therefore all about scale, ­supply chain management, sourcing and customer relationships and far less about innovation and brand. These factors naturally lead to looking at deals that drive scale and provide synergies.”

Continued interest in the UK from international acquirers and three mega-deals contributed to a total of 43 deals in the third quarter. It represented a decline on second quarter deal volume of 62, but activity for the year is similar to the corresponding period in 2016, with 146 UK and Irish transactions in 2017 to date compared with 152 a year ago.

Three mega-deals contributed to a total disclosed deal value of £6.4bn during the period, double that of the second quarter. Excluding the mega-deals, the quarter’s total disclosed deal value was £1.2bn, compared with £1.7bn in the prior three months, excluding the Weetabix transaction of the second quarter.

The biggest deal of the quarter was McCormick’s acquisition of Reckitt Benckiser’s non-core food business for £3.2bn, followed by the Moy Park transaction and the (proposed) sale of Cott’s bottling activities in the UK, US and Mexico to Refresco.

There was no let-up in the appetite of international acquirers in the quarter, with the domestic to cross-border ratio heavily weighted in favour of overseas buyers at 40:60, Griffith added. Of the 34 deals involving UK/Irish targets, 48.5% of the acquirers were from overseas - this compares with 31% for the first half of 2017, and a similar level on average for the whole of 2016.

“It is not just the exchange rate driving attractiveness of UK businesses,” Griffith said. “There is a scarcity of assets on a global scale and the UK remains a very attractive place to buy businesses and with Brexit uncertainty it is arguable now more attractive to have a UK presence if you didn’t have one before.”