Acquisition opportunities abound in Aust food and bev sector

Don’t believe the bad news: despite difficult market conditions around the world, Australia has more food and beverage acquisition targets than any other country in the Asia-Pacific region, a new report from Grant Thornton shows.

According to the firm, now is the time for mid-sized food and beverage businesses to formulate growth plans or exit strategies in order to capitalise on the increasing number of acquisition and divestment opportunities available in the sector.

The Food & Beverage Deal Tracker Report, Bite Size, ranks Australia as having the fifth-highest level of food and beverage transactions globally from January 2011 to March 2014.

“Acquisition opportunities within the Australian food and beverage sector are receiving interest from local, international and private equity buyers. Fuelled by the sector’s prime position to service Asia’s growing demand for high-quality food products, CEOs and owners within the sector need to ensure their businesses are well positioned to capitalise on current opportunities within the sector,” said Cameron Bacon, food and beverage partner, Grant Thornton Australia.

The sector sees most of its transactions targeted by local buyers, Grant Thornton says, backed up by its Hunger for Growth Survey, which indicated that approximately two-thirds of Australian businesses within the sector had intentions to either sell or acquire a business in the next 12 months.

“We’re seeing buyers heavily focused on the food segment, which makes up 75% of total transactions in the sector,” said Bacon.

The report also revealed that higher valuation multiples were achieved by businesses with strong brands in premium segments.

“As the trading and transaction multiples of Australian food and beverage companies are often lower than equivalent companies in North America or Europe, we will continue to see strong interest from international buyers seeking the opportunity to purchase good quality companies for a reasonable price that are well positioned to benefit from growing Asian demand,” Bacon said.