In 2019 the U.S. and Canadian food and beverage industry closed 276 mergers and acquisitions, according to Duff & Phelps, a multinational financial consultancy that publishes quarterly Food and Beverage M&A Landscape reports. The firm’s Fall 2020 report reveals 209 closed deals for the first three quarters of 2020: 82 in Q1, 56 in Q2, and 71 in Q3.
In Q2 many buyers shifted their focus away from M&A and other strategic initiatives due to COVID-19, note the Summer and Fall reports. However, reduced uncertainty in Q3 led to more food and beverage M&As than occurred in Q3 of 2019. “Businesses and consumers have adapted to ‘the new normal,’ and credit markets have recalibrated to allow access to capital for acquisitions,” states the Fall report.
Duff & Phelps expects more M&A activity to occur in Q4, stating strategic buyers have ample cash and private equity funds have access to stable financing again and need to place capital. Also, Special Purpose Acquisition Companies (SPACs) are becoming “a new vehicle for investors to create value in the food and beverage space.”
Consulting firm PwC agrees, also saying, “The M&A recovery that began in the second half of 2020 will accelerate in 2021, as corporate and private investors have access to capital and can pursue deals to build scale and expand scope.”
PwC believes investors want to strengthen core operations, build operational efficiencies, and expand digital capabilities to build resilience and emerge stronger in the new normal of COVID. Attractive high-growth food categories include snacks, frozen foods, plant-based products, and better-for-you products.
As for who drives M&A activity in the food and beverage sector, it is strategic buyers (including companies mostly owned by private equity investors), according to Duff & Phelps. For the 12 months ending September 30, 2020, strategic transactions accounted for 83% of total deal value.
North American M&A Activity by Subsector For 12 Months Ending September 30, 2020
Source: Food and Beverage M&A Landscape, Fall Report, Duff & Phelps
Sampling of Deals Announced in Q4 2020
Buyer
Acquired
Deal Announced
GrubMarket
Best Fresh Produce
October 22
The Fillo Factory
GeeFree
October 28
Nestlé USA
Freshly
October 30
Ingredion, Inc.
Verdient Foods Inc
November 1
Kerry Group
Bio-K+ International Inc.
November 4
Crave Better Foods, LLC
Solero Organic Fruit Bars
November 10
Utz
On The Border
November 12
Mars, Inc.
Kind Healthy Snacks
November 17
Ahold Delhaize and Centerbridge Partners
FreshDirect
November 18
HelloFresh
Factor75
November 23
McCormick
Cholula Hot Sauce
November 24
B&G Foods, Inc.
Crisco brand of oils and shortening from The J. M. Smucker Co.
December 1
Kind Healthy Snacks
Nature’s Bakery
December 2
Post Holdings
Peter Pan Peanut Butter from Conagra
December 7
TreeHouse Foods
Riviana Foods U.S. branded pasta business
December 11
Michael Foods, a subsidiary of Post Holdings, Inc.
Almark Foods
December 14
Whole Earth Brands, Inc.
Wholesome Sweetener
December 17
Egg Innovations, Inc.
Peckish
December 17
Source by foodindustryexecutive.com
