Merger Activity At Seven-Year High In 2014

Food Institute

With a total of 529 mergers and acquisitions tracked by the , 2014 marked the fourth straight year this tally has increased. The total was just 1.3% higher than the 522 recorded last year and the highest total since 2012’s 556 transactions. As expected, declines in some industry categories were offset by increases in others.

Activity among brewers, dairy processors, foodservice vendors, hotels/motels, nonfood marketers, poultry processors, restaurants, , and snack food manufacturers all increased last year. Agricultural cooperatives, bakers, brokers, food processors, meat processors, retailers, and wholesalers, all declined during the same period.

Food Processing

The most active segment was once again food processing even though divestiture activity was actually down 9% from 2013 to a total of 96. Among the deals completed in this segment:

ConAgra’s purchase of Van Camp’s beans and Wolf’s Brand chili from Quaker Oats and Dean Foods’ purchase of frozen vegetable processor Norcal Crosetti Foods. ConAgra also purchased Knot’s Berry Foods last year and the Mogen David trademark. Dean Foods made three other acquisitions as well. Another firm that popped up quite often was H.J. Heinz which purchased two food operations in Eastern Europe and the pet food business of Quaker Oats.

Foodservice Operations

Restaurant and foodservice operations was the second most active area, with a record-high 78 transactions recorded – seven more than in 2013 and 21 more than in 2012. While there were no blockbuster deals in the foodservice segment last year, there was significant interest in two specific restaurant concepts – bagel shops and coffee bars. Mergers involving the purchase of five bagel operations as well as five coffee bars were tallied. In addition, one coffee bar operator, Starbucks of Seattle, WA, purchased a stake in a 20-unit bagel chain – New York Bagels Inc.

Food Supermarkets

On the retail side of the business, activity was down among supermarkets and convenience stores. Even so, some significant deals closed last year: Yucaipa Cos. purchased Ralphs Supermarkets Inc. in a $1.5 billion deal as well as Dominick’s Finer Foods of Chicago for $749 million; Boston’s Stop & Shop Cos. bought New York’s MelMarkets chain of 17 Foodtown stores and Purity Supreme’s 55 supermarkets & 66 convenience stores. Meanwhile, Maine’s Hannaford Bros. leapfrogged into the Southeast, purchasing eight supermarkets from Farm Fresh Inc., from which it plans to expand further.

Food Businesses

Among wholesalers’ Richfood Holdings purchased Norfolk, VA-based Camelia Food Stores and Harrisburg, PA’s Super, Rite Foods; and Fleming expanded in Arizona via its takeover of the 71-unit ABCO Markets, Inc.

Which was the most active company as far as merger and acquisitions are concerned? Omaha, NE-based ConAgra, Inc. is the winner here, purchasing a total of six food-related businesses last year while selling off four operations for a total of ten transactions. New York’s Philip Morris Cos. was second, with a total of six, selling three as well as buying three food businesses last year.

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