One of the UK’s largest produce traders has forecast a spate of mergers and acquisitions but warned companies must be more realistic about their worth.
Wiliam Burgess, chief executive of Produce World, told delegates at an English Farming and Food Partnerships seminar that further buy-outs were to be expected in the fruit and veg trade in the near future but said there may be stumbling blocks.
Taking part in a panel debate under the theme ‘Time to Invest?’, Burgess said: “Our market is consolidating and there are good opportunities to invest if there’s capital behind them.
“I think there will be more opportunities for mergers and acquisitions - the economy is going to take a long time to recover and the smaller businesses may not be able to survive that.
“The problem is the availability of debt and finance to do the deals, also people’s price expectations have not reduced during the recession so they are still looking for higher prices when they come to do deals,” he said.
Burgess gave an insight into Produce World, which has a turnover of £230 million and farms on 11,000 acres in the UK and Spain, saying the firm had made £25m of capital investment in the last five years. He said the company had “never had any outside equity investment but we will not rule it out”.
In a survey conducted by the EFFP in May, 20 per cent of respondents said they were considering a merger or acquisition.
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