Despite a recent flurry of some big name food industry acquisitions, the first half of 2002 was a lackluster period for food business merger and acquisitions.
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The Elmwood Park, NJ-based Food Institute tracked just 219 mergers and acquisitions in the food industry during the H1 2002, down 26% from the same period in 2001 and 37% from the Q1 2000. Last year, 516 transactions took place, down from 641 in 2000 and down from 1998’s record 813 deals.
Whether trying to digest prior acquisitions or keeping the purse strings tight in the post-11 September economy, nine of the 16 major categories (excluding e-commerce) tracked by The Food Institute witnessed a declining numbers of deals, while two were unchanged and five increased.
“Among the most acquisition-shy in the sector were food processing firms, which recorded 49 transactions, 36 fewer than in the H1 2001, and retailers, who sealed 16 deals, 13 less than a year earlier,” noted Catherine Pfister, industry analyst at The Food Institute. Acquisitions by investment firms/banks were on the rise, totalling 25 deals, just one less than was recorded for the entire year of 2001.
Dominating the press in the period was South African Breweries’ takeover of Miller Brewing to create the world’s second largest brewer. Also noteworthy was No. 3 US hamburger chain Wendy’s International’s entry into the Mexican food arena with its intent to purchase Fresh Enterprises, owner of the 169-unit Baja Fresh Mexican Grill restaurant chain. Sending chills through its competitors in the ice cream business, Switzerland’s Nestlé said it would merge its US ice cream unit with Dreyer’s Grand Ice Cream, Oakland, CA, the largest US ice cream maker, giving Nestlé 17% to 18% of the US market, up from 6% currently.
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By GlobalDataThe H2 2002 has kicked off with a bang. Among the high-exposure deals sealed within the last month: a Texas Pacific-group led consortium’s agreement to purchase the Burger King chain from British liquor king Diageo and Castle Harlan’s acquisition of the 65-unit steakhouse chain Morton’s Restaurants, after a dizzying bidding war with Carl Ichan. Wakefern Food Corp. successfully closed on its purchase of Big V Supermarkets for about US$185m in cash and assumed liabilities, while after three years of bargaining, Britain’s Marks & Spencer finally found a buyer for Kings Super Markets, Parsippany, NJ. D’Agostino Supermarkets recently agreed to pay US$160m for the 29-unit upscale grocery chain after NY-based Gristede’s Foods could not come up with the $155m it offered to pay for Kings just a month earlier.
To view the mid-year activity by category go to: http://www.foodinstitute.com/mg2002half.htm
