The hesitation of the food industry to engage in new merger activity was still evident in 2013, with only 311 deals, roughly the same as in 2012, according to the Food Institute's "Food Business Mergers & Acquisitions 2013."
Published annually by the Food Institute, this book contains analysis of the transactions that occurred throughout the year in over 25 different categories including food processors, restaurants, retailers, investment firms and banks and foodservice distributors. The specifics of each of the deals that took place in 2013, plus analysis of mergers and acquisitions (M&A) activity by category, provides valuable insight into one of the most important aspects of the food industry.
While the food industry may have seen declines in merger activity overall, the retail category was increasingly busy. Retailers made up 13 percent of all food industry mergers in 2013, in large part because of the exceptional year that supermarkets had. This year there were the most supermarkets mergers and acquisitions since 2007, and nine more deals than in 2012. And with talk of leading supermarket chains, such as Safeway, considering sales, this trend may well continue.
Food processors again completed the most deals in the food industry in 2013, making up 34 percent of the overall industry mergers and acquisitions. This category grew 27 percent from 2012 to 105 total deals in 2013. Within this group, dairy, meat and "other" processors saw considerable growth, with the dairy industry doubling mergers from 2012.
Investment firms and banks were the second most active group, acquiring 47 food companies, including Berkshire Hathaway and 3G Capital's purchase of H.J. Heinz Co, one of the largest food industry acquisitions ever. Another massive food industry merger came in the foodservice category: Sysco Corp.'s proposed acquisition of US Foods. This merger could mean a big change in foodservice, and represents the large impact that mergers and acquisitions can have on the industry.
The food industry mergers and acquisitions future seems to be looking up, but overall growth is uncertain. Some industries and categories have seen increases in activity, while others see just as much decline. The rise in mergers and acquisitions has still not reached levels similar to 2008 and prior years, but has been steadily increasing since the stark decline in 2009.
The "Food Business Mergers & Acquisitions 2013" study recaps these deals, as well as many others, that were completed or left open at the end of the year, while also providing an outlook into 2012 and beyond. Alongside balance sheets and multiples charts, this publication offers information that can put a potential deal into better focus or provide a unique perspective with records of similar mergers.