Grant Thornton's Dealtracker report for Ag, F&B sector

Advisory firm Grant Thornton has released the findings of its 2024 Agribusiness, Food and Beverage Dealtracker, an analysis of the Australian mergers and acquisition (M&A) and equity market activity in the Agribusiness, Food and Beverage (Ag, F&B) sector for the 18-month period ending 30 June 2024.

While economic uncertainty remains, the report shows a strategic shift in the Ag, F&B sector, with more focused deal activity in the mid-market space concentrating on future-focused businesses that are tech-enabled and innovative, and prioritise ESG and sustainability.

Dealtracker snapshot

• Australia ranked sixth globally by deal volume, recording 49 deals, a slight decline compared to prior reporting periods. However, 92% of domestic deals were valued below $50m, compared to 69% over historical periods, indicating greater focus on mid-market deals.
• Packaged foods continue to dominate, accounting for 53% of Australian transactions. While there was an 8% decrease from the historical period, six of the top 10 Australian deals were in this sub-sector.
• Transaction multiples increased, showing buyers’ willingness to pursue the right opportunity.
• Tech-enabled, innovative, ESG- and sustainability-focused businesses continue to attract significant interest, suggesting businesses that remain agile and able to adapt to ESG and sustainability requirements will come out on top.
• Global M&A deals decreased with a 16.6% reduction compared to the prior 18-month period.
• Asia–Pacific cornered the global IPOs, with 94% of global IPOs including 27 in India and 12 in China.
   

“While Australian deal volumes have slowed reflecting inflationary concerns, domestic mergers and acquisitions in the Agribusiness, Food & Beverage sector have shown a shift toward the mid-market suggesting a real opportunity for those businesses able to be agile and stay on the front foot when it comes to ESG and sustainability,” said Cameron Bacon, National Head of Agribusiness, Food & Beverage at Grant Thornton.

Over the 18-month reporting period, there were 26 transactions with disclosed multiples, with the median transaction multiple increasing 11.4x, a positive increase from the historical median of 10.0x. There was a downward trend in the number of global IPOs, reflecting market conditions and inflationary pressures. The average IPO proceeds have also reduced from $118.5m in the previous period to $58.0m for the current period, largely due to smaller IPOs in emerging markets.

Locally, Australia leads the charge with 69% of domestic deals focused on domestic acquisitions. Australia remains an attractive investment, with the share of foreign buyers increasing from 17% of deals to 20% in this reporting period.

Image credit: iStock.com/AleksandarGeorgiev