At least 57 UK fresh produce firms are prime takeover targets and another 83 could be sold off by their parent companies, according to a new report by independent business analysts Plimsoll Publishing.

At the other end of the scale are 34 major companies that are expanding rapidly, largely through acquisitions, and 90 “predators” who are using the misfortune of others to clean up in the market.

Plimsoll senior analyst David Pattison said: “The 57 takeover targets we have identified generally have a similar profile -- they are privately owned, in financial difficulty and have owners who are approaching retirement. Any firm in this position should be listening to the warning bells, because its potential selling price will be in the bargain basement. The other 83 distressed companies are operating as divisions of larger parents. I’m fairly certain that conversations are going on behind closed doors about their future.”

Big players in the market are focusing on companies with sales of around £5 million. Interestingly, the research reveals, some are being bought not just because they offer good value for money and an extra foothold in the market, but in case they fall into the hands of competitors. The 143 companies that fall into this bracket are in the fortunate position of being in a sellers’ market, so they are able to name increasingly higher prices as availability reduces.

“These are typically the two classic profiles of the takeover target,” said Pattison. “Up-and-coming industry players and those who have fallen on hard times. Sadly, in the latter category we see some firms that were doing very well only a few years ago but allowed costs, debts and margins to get out of hand. It’s worth saying that our research has identified 230 companies whose current value is 50 per cent lower than a credible future value. Potential new owners believe that they can run the company better than the current owners and turn this future value into hard cash. Against a background of over-capacity, rising costs and falling margins, consolidation in the UK fresh produce market is inevitable in 2007.”

Topics