In developed markets, M&A trends in the food sector are being driven by a strong focus on health and wellness, cost efficiency and technology adoption. Consumers are placing more value on organic, sustainable and healthier food options, prompting companies to pursue acquisitions that align with these preferences. At the same time, rising inflation and supply chain disruptions are placing pressure on margins, encouraging companies to consolidate operations to reduce costs and improve profitability. Technology is also playing a growing role, with traditional food companies acquiring tech-savvy start-ups to enhance production processes, streamline supply chains and expand their online presence.

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In African markets, M&A activity in the food sector is accelerating due to a different set of growth drivers. Population growth means an increasing demand for food products, while rapid urbanisation is changing consumer habits and driving interest in processed foods, prompting traditional companies to modernise and scale up through strategic mergers and acquisitions. In addition, Africa’s emerging markets present attractive opportunities for international investors seeking to enter or expand within the continent’s food sector.

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Legal trends
The legal landscape surrounding M&A in the food industry is complex and varies across regions. However, several common trends have emerged and are reshaping the food industry’s legal landscape. One of the most significant is increased regulatory scrutiny. Competition authorities are taking a more active role in reviewing M&A transactions to prevent the creation of monopolies and to ensure fair competition. In the United States of America (USA), for example, the Federal Trade Commission (FTC) and the Department of Justice review M&A activity under antitrust laws. In South Africa, the Competition Commission plays a similar role. These regulatory authorities can block or require modifications to proposed mergers that threaten consumer choice or market integrity. For instance, the FTC recently blocked a proposed US$25bn merger between Kroger and Albertsons due to concerns over reduced competition and potential price hikes. Cross-border M&A deals face additional regulatory hurdles as authorities and enforcement agencies assess compliance with global standards, which can delay or derail deals.

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Environmental, social and governance (ESG) considerations are also becoming more prominent in M&A decision-making. Although individual ESG elements have long featured in due diligence processes, there is growing pressure on acquirers to demonstrate broader alignment with sustainability and social responsibility goals. Acquiring a company with strong ESG credentials can enhance brand reputation and appeal to socially conscious consumers and investors.

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Due diligence remains a central component of any M&A transaction. Legal due diligence typically involves reviewing contracts, employment and labour matters, intellectual property and regulatory compliance (including licences and land rights). This legal review is conducted in tandem with financial, tax and operational due diligence to identify potential risks that could influence negotiation strategies, risk allocation and purchase price adjustments. The insights gained during due diligence are key to shaping negotiation strategies, allocating risk, adjusting the purchase price (where necessary) and, ultimately, ensuring that the transaction delivers long-term value. 

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Key considerations 
When assessing M&A opportunities in the food industry, businesses must take several factors into account. It is essential to assess whether the target company aligns with your strategic objectives, whether that means expanding your product line, gaining access to new markets, or acquiring technological capabilities. A comprehensive financial analysis will help determine the target’s profitability, debt levels and potential for sustainable growth. Planning for integration is equally important. Companies need a detailed approach to merging operations, harmonising supply chains, managing culture, and aligning systems across the combined business. Risk management should also be prioritised, with clear strategies in place to address potential risks, such as regulatory barriers, market volatility and operational disruptions. 

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While M&A activity in the food industry offers significant opportunities for growth and diversification, these transactions are not without legal and operational complexity. Success depends on a clear understanding of evolving market trends, strong legal and regulatory awareness, and thorough preparation throughout the deal process. By staying informed and taking a strategic, risk-aware approach, companies can navigate this evolving landscape with confidence and position themselves for long-term success. 

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Kgaile is a Partner and Gebashe an Associate | Webber Wentzel