M&A Activity In UK Leisure Industry Strong
The UK Leisure industry continues to be a leading sector for M&A activity, with 399 deals totaling £51.8 billion announced since 2004. According to mergermarket intelligence, this places the Leisure industry firmly within the UK’s top three sectors by both value and volume for the period.
Only the Financial Services sector surpassed Leisure in terms of cumulative deal value over the same period, mergermarket says in a Spotlight on Leisure produced in conjunction with PPM Capital. In volume terms, Leisure was third behind Services and Financial Services respectively.
Private equity plays a substantial role in the sector – buyouts accounted for 37.1% of total deal value and 27.1% of total deal volume, while private equity exits amounted to 37.1% and 18.6% of total deal value and volume respectively.
The Restaurant & Pub sub-sector continues to lead the way in terms of both M&A value and volume, having closed 110 deals worth just under £16bn over the period. As a complementary sub-sector to Restaurants & Pubs, the Hotel industry is close behind, with 94 deals worth £13.3bn. Gambling & E-gaming recorded 38 deals worth £4.9bn while Gym-related deals generated £2.8bn from 13 deals.
The report’s prevailing theme focuses on the effects the recent imposition of the smoking ban will have on the principal sub-sectors. Debate still rages on the effect the smoking ban will have on restaurants and pubs, while the traditional gambling industry will definitely feel the pinch –especially the bingo halls, where it has been reported that up to 60% of punters enjoy a cigarette while playing bingo.
Noting that pub-related M&A activity has recently slowed, the report cites a shift towards healthier eating and drinking.
The increasing popularity of what has been coined as the ‘wellness’ sector could spell the end for the typical fuggy boozer.
Increasing media exposure to the dangers of obesity and binge drinking have meant that there is a danger that, without action, pubs’ drink and food sales will most likely head south. However, pubs are responding to this by re-branding themselves as ‘gastropubs’, offering higher quality foods and drinks –notably wines – for their more discerning customers.
The report Leisure Sector Spotlight can be downloaded at no charge here.
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