Food Industry Acquisition Activity Cooled a Bit in 2018

This article is part 2 of our Food Processing Top 100© reporting for 2019. You can read our analysis at Top 100 Food and Beverage Companies for 2019: Bouncing Back

There were 527 food industry mergers and acquisitions in 2018 (28 of which did not close by year-end), down almost 11% from 2017’s record year, according to The Food Institute. Food processors, investment firms and retailers were once again the largest segments, taking part in more than half of the deals for the year.

Manufacturers, excluding beverage producers, were involved in more than 150 deals in 2018, a 20% drop from 2017. Tyson Foods and its Tyson Ventures arm was the most active in the sector, acquiring or investing in six companies.

Following the trend of the past few years, many companies used accelerator programs and investment arms to purchase small or emerging companies in their field. General Mills’ 301 Inc. branch was particularly active, investing in Urban Remedy, Rhythm Superfoods and Nextfoods Inc.

The biggest one of the year was Conagra's $10.9 billion purchase of Pinnacle Foods, an assemblage of cast-off but still profitable grocery staples like Duncan Hines mixes, Log Cabin syrup and Birds Eye vegetables.

Pet food remained a good diversification strategy for general food companies. General Mills started out 2018 by offering $8 billion for Blue Buffalo Pet Products. J. M. Smucker Co., already deeply invested in the category with the 2015 purchase of Big Heart Pet Brands (a large stable of familiar brands including Gravy Train and Meow Mix) last year added Ainsworth Pet Nutrition, which includes the Rachael Ray Nutrish brand, for $1.7 billion.

Another category-altering deal was Nestle's planned exit from the U.S. candy business. Such brands as Crunch, Baby Ruth and Butterfinger, as well as non-chocolate candies, were up for auction. The winner with a bid of $2.8 billion was Italy's Ferrero Group, which immediately became the No. 3 candy company in North America.

Mergers & Acquisitions Activity Broken Down by Category

For a deeper dive into who acquired and/or merged with whom, we break it down category by category below.

In Bakery: Flowers Foods acquired Canyon Bakehouse for $205 million. Hostess Brands Inc. acquired certain U.S. breakfast assets of Aryzta LLC. Mondelez purchased Tate’s Bake Shop. Dessert Holdings acquired Atlanta Cheesecake Co. to operate alongside The Original Cakerie and Lawler’s Desserts. C.H. Guenther & Son acquired Cookietree Bakeries, boosting its footprint to 21 facilities. Brynwood Partners acquired a portfolio of mostly legacy Pillsbury brands from J.M. Smucker Co. for $375 million.

In Confectionery: Spangler Candy Co. acquired New England Confectionery Co. (Necco) from Round Hill Investments for $17 million.

Dairy: Lactalis acquired Siggi’s, a producer of Icelandic-style skyr yogurt.

Fruit and vegetable: Fresh Del Monte Produce acquired Mann Packing Co. for $361 million.

Meat: Marfrig Global Foods SA acquired a controlling stake in National Beef Packing Co. for $969 million. Land O’Frost acquired Wellshire Farms.

Poultry: Tyson Foods invested in organic chicken company Tecumseh Poultry LLC. Cal-Maine Foods Inc. acquired substantially all of the assets of Featherland Egg Farms. George’s Inc. acquired Ozark Mountain Poultry.

Snack food: Metropoulos & Co. sold its stake in Utz Quality Foods back to the company’s owners and management for $300 million. PepsiCo acquired Bare Foods, a company specializing in fruit and vegetable snacks. Hershey Co. acquired Pirate Brands from B&G Foods for $420 million.

There are many, many more deals included in the Food Institute's report.