Acquisitions and takeovers highlight active quarter in food and beverage industry

by Monica Watrous
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KANSAS CITY — Strategic acquisitions during the year’s first quarter suggest an appetite for growth across the grocery store. Hormel Foods Corp.’s acquisition of Skippy peanut butter, announced in January, expands its branded presence in the center store. Tyson Foods’ February purchase of assets from Don Julio Foods, a tortilla and salty snacks maker, helps the company shed its image as a commodity protein producer.

Other activity during the quarter involved investment group takeovers, including Supervalu Inc.’s $3.3 billion sale of five retail banners to a consortium in March and the February-announced $28 billion acquisition of The H.J. Heinz Co. by Berkshire Hathaway and 3G Capital. 

That milestone deal may leave some questioning whether more industry mega sales lie ahead.

“There are a lot of people talking about the coming wave of acquisitions,” said James E. Neely, vice-president of Cleveland-based Booz & Company, Inc., following the Heinz announcement on Feb. 14. “They are asking, ‘Is General Mills next?’… Heinz represents a wonderful deal for Berkshire Hathaway, but I don’t necessarily believe it triggers a wave in consumer mergers and acquisitions. It is just as likely the next large one will be in transportation or manufacturing.”

While some companies are padding their portfolios with diversified products, others seek to shed businesses. Using Heinz as an example, Mr. Neely noted that strategic divestures may be just as critical as acquisitions.

“Heinz itself is a great story,” he said. “They have successfully gotten their portfolio aligned around certain capabilities. Others have made similar changes. Kraft carved out grocery business from snacks. Sara Lee pared its portfolio to a North American meat business and an international coffee business. It’s all about getting a portfolio tight.”

Food Business News compiled merger and acquisition activity in the food and beverage industry that occurred during the first quarter. Click the links to read more about each deal.

 

Grain-based foods

Aryzta AG, Zurich, Switzerland, in February acquired Klemme AG, a German-based baking company that operates seven bakeries with multi-product manufacturing capabilities, for €280 million ($374 million). Click here for the story.

Flowers Foods, Inc., Thomasville, Ga., in February completed its acquisition of licenses to the Sara Lee and Earthgrains brands in California from Bimbo Bakeries USA, a subsidiary of Grupo Bimbo S.A.B. de C.V. Terms of the agreement were not disclosed. Click here for the story.

McCain Foods (Aust) Pty. Ltd. announced in February it had completed the acquisition of the Kitchens of Sara Lee frozen bakery business from Hillshire Brands Co., Chicago, in a transaction valued at approximately $85 million. The original sale was announced in December 2012. Click here for the story.

Nonni’s Foods L.L.C., a Chicago-based supplier of biscotti and almond thins in North America, in January acquired Villa Veneto Corp., Glendale, Ariz., who makes artisan biscotti and other specialty cookies sold in the club and grocery channels under the La Dolce Vita brand. Click here for the story.

Post Foods, a subsidiary of Post Holdings, St. Louis, in mid-January acquired San Francisco-based Attune Foods, maker of Uncle Sam high fiber cereals, Erewhon gluten-free cereals, Erewhon organic graham crackers and Attune chocolate probiotic bars. Financial terms were not disclosed. Click here for the story.

 

Dairy

The dairy cooperative Agropur, Longueil, Quebec, announced in January it had acquired the dry ingredients blending business of Foremost Farms USA, Baraboo, Wis. Foremost’s dry blending business includes brands such as Reddi-Sponge, PZ-44, Econo Bake, Dairy Bake, Nutrimix and Baker’s Special. Terms of the agreement were not disclosed. Click here for the story.

 

Meat and poultry

Butterball, L.L.C., Garner, N.C., announced in January it had acquired Gusto Packing Co., Montgomery, Ill., a family-owned pork processor with six product lines, including hickory and apple wood smoked bacon, bone-in smoked pork and turkey products, smoked boneless hams, cooked hams, pork and turkey deli meats, and spiral sliced hams. Terms of the agreement were not disclosed. Click here for the story.

Smithfield Foods, Inc., Smithfield, Va., announced in mid-February it had acquired 50% of the Kansas City Sausage Co. L.L.C. and its sister company Pine Ridge Farms L.L.C. The company said the effort will be funded with cash on hand and is expected to close in the fourth quarter of Smithfield’s fiscal year. Terms of the agreement were not disclosed. Click here for the story.

 

Diversified food products

Cargill, Minneapolis, in January acquired two animal feed mills from Pennfield Corp. and associated assets in Mount Joy and Martinsburg, Pa., for $9.8 million in a bankruptcy proceeding. Click here for the story.

ConAgra Foods, Inc., Omaha, completed its acquisition of Ralcorp Holdings, Inc., St. Louis, following the approval of the transaction by Ralcorp’s shareholders on Jan. 29 and the receipt of all required regulatory approvals. ConAgra Foods on Nov. 26, 2012, agreed to acquire Ralcorp for $90 in cash per share of Ralcorp common stock. The transaction was valued at about $6.8 billion, including the assumption of debt. Click here for the story.

An investment consortium including Berkshire Hathaway and 3G Capital in mid-February entered into a definitive merger agreement to acquire The H.J. Heinz Co., Pittsburgh, in a transaction valued at $28 billion, including the assumption of debt. The transaction is subject to regulatory and shareholder approval and was expected to close during the third quarter of calendar year 2013. Click here for the story.

Hormel Foods Corp., Austin, Minn., announced in January it had agreed to acquire the Skippy peanut butter business from Englewood Cliffs, N.J.-based Unilever in a transaction valued at approximately $700 million. The transaction was expected to close in early 2013. Click here for the story.

JBS Food Canada, Inc., a subsidiary of JBS USA, in mid-January completed its acquisition of certain Canadian operations of XL Foods, Greeley, Colo. Click here for the story.

Nestle S.A., Vevey, Switzerland, in late February acquired Pamlab L.L.C., Covington, La., a manufacturer of medical nutrition foods for a variety of medical conditions, including diabetes, depression, high-risk pregnancy and cognitive impairment. Terms of the acquisition were not disclosed. Click here for the story.

Premium Brands Holdings Corp. announced on Jan. 24 the commissioning of a new seafood processing plant in Richmond, B.C., and the purchase of salmon and high-grade tuna sushi processing businesses from Harbour Marine Products, Inc., for $1.35 million. Click here for the story.

Premium Brands Holdings Corp., Vancouver, B.C., in late March signed a definitive agreement to purchase Freybe Gourmet Foods, Ltd., a Langley, B.C.-based deli meat manufacturer, for $55 million. Click here for the story.

Saputo Inc., Montreal, announced in January it had completed its acquisition of Morningstar Foods, L.L.C., a subsidiary of Dallas-based Dean Foods Co., for $1.45 billion. Click here for the story.

Seneca Foods Corp., Marion, N.Y., in mid-January completed its acquisition of Sunnyside, Wash.-based Independent Foods, L.L.C., a privately-held processor of canned pears, apples and cherries. The acquisition was first announced in November, and terms of the transaction were not disclosed. Click here for the story.

Tyson Mexican Original, Inc., a subsidiary of Tyson Foods, Inc., Springdale, Ark., in mid-February acquired the assets of Don Julio Foods, Clearfield, Utah. Financial terms of the deal were not disclosed. Click here for the story.

 

Food ingredients

Innophos Holdings, Inc., Cranbury, N.J., announced in January that it had completed its acquisition of Triarco Industries, Inc., a custom ingredient manufacturer, for $46 million. Click here for the story.

 

Food service

Le Duff America, Inc., the North American subsidiary of Rennes, France-based Groupe Le Duff, in early March completed the acquisition of Mimi’s Cafe for $50 million from Bob Evans Farms Inc. The agreement was announced on Jan. 29. Click here for the story.

 

Produce

Bayer CropScience, Monheim, Germany, in January signed an agreement to acquire Prophyta GmbH, a supplier of microbial crop protection products headquartered in Malchow on the island of Poel in Mecklenburg-Vorpommern, Germany. The acquisition includes Prophyta’s R.&D. laboratories and its production and formulation facilities in Wismar, Germany. Click here for the story.

 

Private equity

Rhone Capital L.L.C., Dieman, The Netherlands, in late March reached an agreement to acquire the bakery supplies businesses of CSM n.v. for approximately $1,361 million. Click here for the story.

 

Beverage, non-alcoholic

The Coca-Cola Co., Atlanta, announced in March it had reached an agreement with London-based smoothie maker Innocent Drinks to acquire the majority of the latter’s remaining shares in the company. The transaction was subject to governmental approvals. Click here for the story.

 

Retailers

7-Eleven, Inc., Dallas, announced in January it had acquired 143 Speedy Shop and Tigermarket retail locations from C.L. Thomas, Inc., Victoria, Texas. The acquisition closed on Dec. 31. Click here for the story.

AB Acquisition L.L.C., an affiliate of a Cerberus Capital Management L.P.-led consortium, in March completed its transaction with Supervalu Inc., Minneapolis, to acquire its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related in-store pharmacies to in a transaction valued at $3.3 billion. The sale, which was originally announced in January, included 877 stores and the acquisition of stock from New Albertsons, Inc., a subsidiary of Supervalu, for $100 million in cash, plus $3.2 billion in debt that will be retained by New Albertsons. Click here for the story.

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