Food industry mergers, acquisitions strong in 2007

by Staff
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ELMWOOD PARK, N.J. — The food industry completed 413 merger and acquisition transactions and agreed upon 60 more during 2007, according to Food Business Mergers & Acquisitions, a publication of The Food Institute. In comparison, the food industry completed 392 transactions in 2006 and had 59 others under agreement at the end of the year.

"Food processors have accounted for the highest number of mergers and acquisitions in the food industry for several years running." said Danielle Breuel, research and education director for The Food Institute, Elmwood Park. "However, investment firms and banks have steadily increased their interest in food businesses and are on pace to complete more acquisitions in this industry than food processors in the next few years."

Ninety-four transactions with food processors closed during the year with another 16 in development, but the number of these transactions was down 14.5% from 2006. Investment firms and banks acquired 89 food companies, and 79 transactions involved retailers closed while 57 deals were completed with restaurants. Investment firms increased their transactions by 20.3% in 2007, mostly targeting restaurants. About 44% of investment firm transactions involved a restaurant company or assets. Significant retail transactions included A&P’s acquisition of Pathmark Stores, Inc. and Whole Foods Market, Inc.’s acquisition of Wild Oats Markets, Inc.

"One thing to be said about the deals being carried out in the food processing and beverage sectors is that these acquisitions have a very specific strategic focus — larger C.P.G. firms are purchasing smaller, health-focused companies and brands, namely Coca-Cola Co.’s purchase of the Glaceau and Fuze beverages, PepsiCo’s purchase of Naked Juice and Kellogg’s purchase of Bare Naked granola," Ms. Breuel said.

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