Australian processors should act quickly to formulate growth plans or exit strategies in order to capitalise on the increasing number of acquisition and divestment opportunities available in their sector, a new report by private equity advisory firm Grant Thornton said.
The study found that in spite of the tough market conditions globally, Australia has had more food and beverage acquisition targets than any other country in the Asia-Pacific region.
Australia also ranked fifth highest in the level of food and beverage transactions globally during the period from January 2011 to March 2014, the report found.
“Acquisition opportunities within the Australian food and beverage sector are receiving interest from local, international and private equity buyers,” said Cameron Bacon, food & beverage partner at Grant Thornton Australia.
“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.”
The research also found that despite strong private equity and international interest, the Australian food and beverage sector sees most of its transactions targeted by local buyers.
According to the firm’s research, approximately two thirds of Australian businesses within the sector had the intention to either sell or acquire a business over the next twelve months.
“We’re seeing buyers heavily focused on the food segment, which makes up 75% of total transactions in the sector,” said Bacon.
Bacon also pointed out 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,” said Bacon.