Analysis: Big hitters in the meat industry flex their muscle in bid to get bigger
Mergers and acquisitions (M&A) activity involving participants in the Irish meat processing sector has continued apace in 2017 with the conclusion of some notable deals.
This is in spite of the obvious uncertainty wreaked on the industry and on M&A deals generally by Brexit.
While there are myriad reasons underpinning this M&A activity, a number of common themes are evident.
First and foremost is the continued push for scale. In an industry where operating margins are traditionally tight, top-line growth is critical for meat processing businesses to grow and prosper.
In a Westernised, developed economy such as Ireland, growth by acquisition will often outstrip organic growth in this sector in terms of pace, and hence businesses are attracted to purchasing other players in the sector as a means to achieving scale.
Scale also facilitates additional cost efficiencies, which is another major motivating factor behind many M&A deals.
Recent deals in the domestic meat sector in Ireland include: the purchase of Wilbay Ltd, a leading meat wholesaler based in Laois, by Monaghan-based sausage producer Arthur Mallon Foods in 2016; and the acquisition by Kildare-based cooked meat producer O'Brien Fine Foods of Meath-based Faughan Foods, from Hogans Turkeys in 2017.
However, with the size of the Irish market and competition regulation acting as a constraint on growth by domestic acquisition for some players, businesses have sought to acquire international operators as a means to satisfy their growth aspirations.