Merger and acquisition activity moves forward

by Staff
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ELMWOOD PARK, N.J. — Last year proved to be a busy year for mergers and acquisitions in the food industry, although activity is not up to what it was five years ago, according to The Food Institute.

In all, 348 industry mergers and acquisitions were completed during the year, with an additional 102 announced but not completed before the end of the year. This was an 8% increase in activity from 2005, but these numbers were still down 14% from five years ago.

Overall, food processors contributed to one-third of the activity that closed during 2006, and investment firms and banks contributed to one-fifth of the year’s transactions.

An important segment was investment firms and banks with 65 acquisitions and another 23 under way, a significant increase from 43 in 2005.

In comparing the data with the previous year, the largest amount of mergers and acquisitions occurred with investment firms and banks, restaurants and supermarkets and convenience stores. There were 39 acquisitions with restaurant firms — up from 24 in 2005 — and another nine that had yet to be completed by the end of the year. There were 21 mergers and acquisitions with supermarkets and another 15 pending, compared with nine in 2005. Thirty-two deals were made in the convenience store segment, along with another 10 in the works — an increase from 10 the previous year.

"The magnitude of consolidation among food retailers could continue in 2007, with two key transactions already announced: Whole Foods Market Inc. agreed to acquire natural and organic foods retailer Wild Oats Markets; and warehouse store operator and food service supplier Smart & Final Inc. entered into a definitive merger agreement to be acquired by an affiliate of private equity firm Apollo Management, L.P.," said Danielle Breuel, research and education director for The Food Institute.

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