Deal activity slows

Corporate activity in the food and beverage industry has slowed down significantly mainly due to a loss of investor and consumer confidence following the outbreak of the coronavirus pandemic. The rapid increase in positive tests for coronavirus in metropolitan Melbourne has negatively impacted the performance of food businesses in Victoria and has also impacted investor sentiment. The foodservice industry has been significantly impacted by the forced closure of hospitality businesses. Four transactions were reported over the two and a half months to 7 August 2020.

ASX listed Eneco Refresh announced the acquisition of JB’s Purified Drinking Water, a business that delivers water in 15-litre containers to businesses and residences.

Beston Food Group announced the sale of its dairy farms in Mount Gambier to Aurora Dairies. The dairy farms were sold for a cash consideration of $40.4 million. The sale includes a supply agreement whereby Beston secured 100 per cent of the milk produced from the farms for a period of 10 years, with an option to extend. Beston will use the proceeds to pay down debt and fund production expansion.

ROC Partners has acquired an undisclosed shareholding in tomato grower, Flavorite Group. Flavorite is based in the Gippsland region and is the largest hydroponic grower of tomatoes in Victoria, supplying product to the east coast of Australia. Flavorite also supplies capsicums, cucumbers and blueberries.

Buderim Ginger sold the company’s ginger and tourism business assets to the Himstedt family for a consideration of $13 million. The assets sold include the Yandina-based ginger factory, associated ginger brands and the business operations in Fiji.

The outlook for corporate activity over the next few months is uncertain. An important determinant will be the length of the stage 4 lockdown restrictions in Melbourne and whether the number of positive coronavirus cases in other states can remain under control. Comet Line is hopeful that in time circumstances will stabilise providing buyers and sellers will more comfort on the future and a higher level of confidence to progress acquisition discussions.

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