Supermarkets were one of the few sectors of the US food industry actively acquiring or merging with other companies in the first half of 2003, during which there were 20 deals (up from 12 during the first six months of 2002), according to industry research group the Food Institute.
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A number of mergers in the first half were buying operations from Fleming, which is divesting its retail operations. One sizeable buy was grocery wholesaler and retailer Roundy’s winning bid for 31 Rainbow Foods stores in a bankruptcy auction. The third quarter began with C&S Wholesale Grocers’ agreement to acquire Fleming’s wholesale grocery business.
On the whole, food industry merger and acquisition activity was tepid in the first half of 2003. The Food Institute said it tracked 194 transactions, down 11% from the same period in 2002 and a drop of 34% from the first six months of 2001. M&A activity among food processing firms held steady – at 46 deals versus 49 during the first half of 2002, but investment firms/banks, which were striking a record number of deals in 2002, slowed their pace, making 13 purchases, about half of their level of activity from the first half of 2002.
Meanwhile, Spartan Stores sold 17 Food Town stores in the Toledo, OH and Southeast Michigan markets. The Kroger Co. represented the largest purchase, buying 13 of the stores. Spartan also sold its L&L/Jiroch and J.F. Walker convenience distribution unit to H.T. Hackney Co.
The end of the second quarter saw the FTC approval of the $2.8bn merger of Nestlé Holdings and Dreyer’s Grand Ice Cream, after the firms agreed to shed three Dreyer’s ice cream brands and Nestlé’s US distribution assets.
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By GlobalDataOther notable deals in the food sector include Wal-Mart Stores’ agreement to sell its McLane food distribution unit to Warren Buffett’s Berkshire Hathaway. Starbucks disclosed a deal to acquire Seattle Coffee Co from AFC Enterprises in a $72m transaction, while Pilgrim’s Pride agreed to buy the chicken operations of ConAgra Foods for $590m, making it the No. 2 US chicken producer.
