Findings from accounting firm Grant Thornton’s (GT) latest Agribusiness, Food and Beverage Dealtracker show resilience in the face of uncertainty, the company said.
GT’s 2023 Dealtracker analyses Australian mergers and acquisition (M&A) and equity market activity for the 18-month period ending 31 December 2022.
GT said it found that despite global economic uncertainty, impacts of severe weather events, and global supply chain issues, there was a stable level of deal activity, consistent with the previous reporting period, “suggesting a quiet confidence in Australia’s Ag, F&B sector”.
That said, transaction numbers remain below pre-pandemic level, indicating businesses remain cautious and considered with investments.
Agribusiness, Food and Beverage Dealtracker snapshot:
- Australia ranked 5th in the world by M&A deal volume (consistent over the historical reporting period) with 67 deals;
- Seafood and Aquaculture industry accounts for three of the top 10 Australian M&A deals, highlighting the pivotal role seafood and aquaculture are expected to play in worldwide food volumes and security in the years ahead. Also, two Australian IPOs in this sector generated $38m, illustrating the future growth potential in this industry;
- tech-enabled businesses were at the centre of investment and IPO activity. This confirms businesses that invest in technology increase profitability and data enabled decision making capabilities are attractive acquisition targets;
- Packaged Food and Meats sector outperformed all others by a significant margin, suggesting the sector has largely recovered from the COVID-19 downturn. The sector was also unsurprisingly the most prominent IPO sub-sector, with 77 per cent of total amounts raised and an average price movement of 17 per cent between the listing date and 31 December 2022; and
- ESG remains front of mind in all acquisition activity. Businesses with sustainable practices and dedicated Environment, Social and Governance (ESG) strategies are shown to be in demand, with stakeholders being clear about their ESG requirements and direction in acquisition activity.
GT Corporate Finance partner Cameron Bacon said the Australian Agribusiness, Food and Beverage industry has shown resilience and remains an attractive investment opportunity for domestic and foreign buyers.
“Our assessment of the acquisition data shows Australia is a key player in the global sector and presents opportunities to ensure long-term global food security through the development of AgTech and increased production efficiencies,” Bacon said.
Over this 18-month reporting period, transaction multiples remained steady combined with an increase of 3.7 per cent in global M&A deals and with 73 global IPOs being recorded – the second largest volume of IPOs in an 18-month period since Dealtracker began in 2011.
While close to 73 per cent of Australian businesses sold were acquired by domestic buyers, a number of those are majority foreign owned.
The Asia Pacific region remains Australia’s biggest foreign investor in Agribusiness, Food and Beverage, with the US and Canada the next largest.
