Food Industry Merger and Acquisition Activity Remained Steady in 2013

The Food Institute recorded 311 mergers in the food industry in 2013; a total that is roughly the same as 2012.

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Food Industry Mergers and Acquisitions in 2013

The Food Institute, during 2013, recorded 311 mergers in what it defines as the broader food industry, bringing the total to roughly the same number as 2012 (287 deals closed plus 29 lingering). While also about even with 2010, those numbers are down from the 381 recorded in 2011, during the depths of the Great Recession when buying companies could be done on the cheap.

Looking at just the two categories that form Food Processing's narrower definition of the food and beverage industry shows a higher level of activity. Among food processors, there were 96 deals closed in 2013 and nine more that were announced but did not close, up from 76 and seven in 2013. And "soft drink/water/juice bottlers and manufacturers" added another nine closings.

The Food Institute, a nonprofit organization founded to collect and disseminate information about the industry, includes in its definition of the food industry a number of other entities as well as brokers, consultants and other service providers, investments firms and banks, packaging and equipment suppliers, raw product and ingredient suppliers, restaurants and foodservice, retailers, and wholesalers and distributors.

Within the true food processors group, dairy, meat and “other” processors saw the most activity. Although it's a Canada-based, mostly dairy firm, Saputo Group now has more sales in the U.S. than in its homeland, thanks in part to the 2013 acquisition of Morningstar Foods. The former division of Dean Foods, which made Friendship cottage cheese and various private-label dairy products like coffee creamers and ice cream mix, brought $1.6 billion in sales to its new owner.

Agropur Cooperative purchased Coast Mountain Dairy, an ice cream producer. Farmer cooperative Dairy Farmers of America acquired Dairy Maid, family-owned processor of milk, juice and fruit drinks. French foods group Danone bought YoCrunch. Lifeway Foods Inc. acquired Golden Guernsey Dairy for $7.4 million; the 170,000-sq. ft. plant will provide additional manufacturing capacity for Lifeway’s growing kefir-based business. The Golden Guernsey plant was shuttered in January following a bankruptcy filing.

Once detached from Dean Foods, WhiteWave Foods Co. acquired Earthbound Farm from its existing shareholders, led by Kainos Capital and founders Drew and Myra Goodman, for approximately $600 million in cash. Earthbound Farm produces and markets an extensive line of organic fresh fruits and vegetables, frozen fruits and vegetables, and dried fruits and snacks.

An interesting international note: Vietnam Dairy Products JSC, known as Vinamilk, received a license from its Ministry of Planning and Investment to purchase a 70 percent stake in California-based Driftwood Dairy Holding Corp. for $30.5 million.

Meat processors also were active in 2013, with mergers and acquisitions rising 300 percent from 2012. The marquee news from that category was the $7.1 billion acquisition of Smithfield Foods Inc. by China's Shuanghui International Holdings Ltd., which closed in September. See Shuanghui Completes Smithfield Acquisition

Even before it began its 2014 pursuit of Hillshire Brands, Tyson Foods Inc. acquired Circle Foods LLC, a producer of frozen and refrigerated handheld Mexican foods, uncooked tortillas and Indian flatbreads. Hillshire, stretching into new niches, bought Golden Island, a producer of more than 20 varieties of gourmet jerky products. See Tyson Buys Mexican Food-Maker Circle Foods

Investment firms and banks occupied 15 percent of all mergers in 2013 with a total of 47. Headliner in that category was the purchase of H.J. Heinz Co. by Berkshire Hathaway and 3G Capital in a blockbuster deal valued at $28 billion. See H.J. Heinz Company to be Acquired by Berkshire Hathaway and 3G Capital

Brynwood Partners acquired the Lightlife brand from ConAgra Foods Inc. Lightlife’s products include vegetarian-based burgers, hotdogs and other meatless frozen and refrigerated items. The transaction includes the Lightlife manufacturing operations in Turners Falls, Mass.

Another notable acquisition in this category was Apollo Global Management LLC and Metropoulos & Co.’s acquisition of certain assets of Hostess Brands Inc.’s baked snack foods business for $410 million. They bought the Twinkies, Mini Muffins, Cup Cakes, Ho Hos, Zingers and Suzy Q’s brands plus five bakeries in the U.S. This new firm appears on our Top 100 chart as Hostess Brands. See The New Hostess Company Resumes Operations

Other pieces of Hostess were dispersed due to its bankruptcy filing. Flower Foods got bread brands Wonder, Merita, Home Pride, Butternut and Nature's Pride, plus 20 bakeries. McKee Foods Corp. snagged the Drake's snack cake business.

In the candy and confections group, Atkinson Candy Co. acquired the Slo Poke, Black Cow and Sophie Mae brands from Laco Inc. Pearson Candy Co., a portfolio company of Brynwood Partners, acquired the Bit-O-Honey brand from Nestle USA Inc. This is the fifth brand Brynwood Partners has acquired from Nestle.

On the international front, Hershey Co. (technically Hershey Netherlands BV) bought Shanghai Golden Monkey, a privately held Chinese firm.

In the fruit and vegetable category, Dole Food Co. Inc. was taken private by its Chairman and CEO David Murdock, who also had been Dole's largest shareholder with a stake of about 40 percent. Paramount Citrus acquired the Cuties trademark by Sun Pacific as part of a move to oversee all facets of the production, sale and marketing for most of the country's California mandarin crop. Paramount Citrus will partner with Fowler Packing to grow, process, market and sell more than 60 percent of the country's California mandarin crop. See Murdock Offers to Take Dole Private, Again

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