just-food’s index of mergers and acquisitions in the international packaged food sector highlights the volume of deals being announced, as company strategists look to M&A to gain an edge on their competition.
The number of mergers and acquisitions announced in December in the global packaged food industry fell year-on-year, despite a hectic final week that saw a clutch of notable deals.
According to just-food data, 23 transactions were unveiled in December 2017, down from 31 in the same month the year before, level with the amount announced in the same month of 2015 but higher than in the Decembers of 2014 and 2013.
2017 ended with a flurry of deals. On 15 December, Unilever announced it had accepted an EUR6.8bn (US$8.14bn) offer for its spreads arm from private-equity firm KKR, as the FMCG giant agreed on a deal for a unit that had long weighed on revenues from its overall food division and one which some analysts had long called for the company to sell.
In the space of a few hours on 18 December, two eye-catching deals in the US were announced, with Hershey moving for US salty snacks maker Amplify Snack Brands, the owner of US brands like Paqui tortilla chips and UK crisp business Tyrrells. The deal is the latest attempt by chocolate maker Hershey to broaden its snacks range amid a stagnant US chocolate market. In 2015, Hershey snapped up US jerky business Krave.
The same afternoon, Campbell Soup Co. announced it was buying Snyder’s-Lance, the country’s number-two savoury snacks business, a deal that looks set to change the shape of the soup group’s domestic operations.
US peer Conagra Brands joined the fray three days later with the acquisition of local frozen foods firm Sandwich Bros. of Wisconsin, its latest transaction under CEO Sean Connolly.
In Europe, two notable transactions came on 22 December, for many the final working day before the festive break. Finland’s Raisio offloaded its confectionery assets to Ireland’s Valeo Foods. Raisio’s confectionery arm had proved something of a mixed bag, with the business in the Czech Republic growing but its operations in the UK struggling.
Meanwhile, Poland’s Colian Holding swooped for Irish chocolate maker Lily O’Brien’s. The deal is the latest struck by Colian in western Europe following its 2016 move to buy upmarket UK chocolate business Elizabeth Shaw.
The soup giant decided to make the Cape Cod crisps and Pop Secret popcorn maker its sixth acquisition in five years, striking a deal that valued Snyder’s-Lance at US$6.1bn.
Since Campbell CEO Denise Morrison took office in 2011, the US food giant has regularly turned to M&A to try to stimulate a top line hampered by problems at its core US soup business. Campbell’s move for Snyder’s-Lance, announced on 18 December, caught the eye as it continues to try to reshape its portfolio.
When completed, the acquisition of Snyder’s-Lance will mean snacks accounts for 46% of Campbell’s sales and soup just a quarter. That’s not to say the deal comes without risk, with Snyder’s-Lance itself in the middle of a turnaround programme instigated by Brian Driscoll last summer after the former Diamond Foods and Hostess Brands chief was brought in to replace Carl Lee Jr., who stepped down after 12 years with the business on the same day as it announced a profit warning.
just-food analysis: Campbell’s move for Snyder’s-Lance is positive but risks lie ahead
just-food analysis: Why – and how – 2018 promises to be buoyant year for M&A in food
The final days of 2017 saw a flurry of transactions in the international food sector, bringing to an end an active year of deal-making. This year looks set to be a busy one for food-company strategists. Dean Best looks at what could lie ahead.