The industry is in serious flux according to a new report revealing as many as one in seven companies in the UK fresh produce industry could change ownership as a result of the current economic climate.
The report, from financial analyst Plimsoll, entitled Plimsoll Industry Analysis - Fresh Produce, suggests a surprising number of “cash rich” competitors are waiting in the wings, meaning the market could be set for a prolonged period of consolidation, the report claims.
The report’s author David Pattison said: “I am sure any director worth his salt would agree that, in the current climate, there are simply too many companies chasing too little market. With many directors eyeing the exit doors and highly leveraged buyouts consigned to history for the time being, it really is a buyers' market out there for cash rich companies.
“We have identified 92 companies that have a sizeable cash reserve sat on their balance sheets that, due to record low interest rates, is generating nothing. One company has a £48 million cash pot; a whopping 80 per cent of turnover. These companies are now in the position to buy up large chunks of market share at rock bottom prices and make that money work for them. They must be like kids in a sweet shop at the moment - all those distressed competitors available at a fraction of their true value.
“The UK fresh produce market is still widely regarded as one of the UK’s most fragmented sectors. In our report we analysed 810 companies with a turnover of more than £1m per annum and have picked out 141 that are primed to be taken over. Buying one of these businesses represents a massive opportunity for someone to enhance their share of the market. Either way, the market is set for a wave of takeovers in the next few months.”
The new study advises which companies are set to be buying and who will be selling within the industry.
FPJ readers are entitled to a £50 discount of this new special edition of the Plimsoll Industry Analysis - Fresh Produce. Call 01642 626400 for further details and quote reference PR/FI40.
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