M&A activity strong and growing

A record 381 mergers were executed in fiscal 2011, an increase of about 20 percent over the 317 deals in 2010, according to Upper Saddle River, N.J.-based The Food Institute's Food Business Mergers & Acquisitions 2011 guide, the newest edition of the annual publication. While the numbers are comparatively high when considering the lull in 2009 that followed the recession, with mergers dipping to 264, the 20 percent rise in activity reflects growing M&A interest in growing segments such as online services and analytics and the re-entry of private capital and investors into the food industry.

 

FMI recounts a shaky year in dealmaking as buyers and sellers watched an up and down swing as markets reacted to daily updates in the Eurozone and threats by rating agencies of downgraded assets. The book contains a list of all mergers involving U.S. firms recorded by the Food Institute, and includes analysis of every industry segment. Trends observed over the year are consolidation in the foodservice industry as well as distressed retail assets coming under new ownership among other retailers.

 

The first half of the year started positively with a combined 196 announced and finalized mergers, a rise of approximately 27 percent over the previous year and about a 65 percent rise from 2009's 117 total mergers, but a 17.6 percent drop when compared with 2008's 238. Boosted by a strong first quarter, M&A declined somewhat in the second quarter, partly a reaction in the market to uncertainty fostered by poor economic data in the U.S. and the debt crisis in Europe. At the time, many analysts predicted that cash-rich strategics would return to the market ahead of private equity in deals unless logical buyers did not exist for assets. Companies that waited through the recession and saved capital emerged to scoop up companies and make acquisitions that supplemented organic growth, as growing economies could no longer be relied on for revenue.

 

In a year that saw the merger of two large supermarket chains as well as the falling apart of a Diamond Foods/Procter & Gamble deal for the Pringles business that would have reshaped the snack food industry, the Food Business Mergers & Acquisitions 2011 book recaps the deals that were completed or left open at the end of the year while also providing an outlook into 2012 and beyond. Deals being made today indicate what can be further expected as an economic recovery continues to gain traction, and offers an informed resource when forecasting possible acquisitions. 

Alongside balance sheets and multiples charts, Food Business Mergers & Acquisitions 2011 offers information that can put a potential deal into better focus or provide a unique perspective with records of similar mergers. Visit http://www.foodinstitute.com/manda.cfm to purchase this publication.