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Michael Poole

E: mpoole@pcecompanies.com

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Industry Trends

Wheat Prices Surge

Roughly 30% of the world's wheat export capacity has been halted as the Russia-Ukraine war continues. Wheat prices have increased by 72% since February of last year in response to Russian trade restrictions, with all U.S. food prices increasing by 7.9% during the same period. Due to droughts in the West and Northern Plains, expectations remain low for U.S. wheat yields. While India and Australia may supplement some supply in the short term, high prices are expected to continue through 2022.1

Agricultural Technology Investments Remain Strong

Farming and agriculture technology experienced a record $4.9 billion in 2021 investments. Activity in the sector continued during the first quarter of 2022, raising over $1 billion in investments from venture capital firms. As supply chain disruptions persist, digitization and data science investments remain strong to help control supply chain disruptions. Environmentally conscious growing methods, like vertical farming, have also gained interest.2

Food Manufacturers Pass Costs to Consumers

Food manufacturers attempt to pass costs to consumers as supply chain disruptions cut margins. In the last quarter of 2021, Kellogg experienced a 12% decline in operating profits despite a 5.2% increase in sales. The U.S. consumer price index rose to 7.5% in January compared to the same period a year prior as companies raised prices to combat crop price increases. The war in Ukraine is expected to keep margins tight for manufacturers like Kelloggs, Kraft, and General Mills through 2022.3

Less Corn and More Soybeans

Farmers consider planting less corn in the upcoming season as soybean prices and fertilizer costs surge. U.S. soybean prices have increased over 18% since 2021 due to unforeseen droughts in South America. Fertilizer prices in February increased by over 200% year-over-year due to supply chain disruptions. Due to corn's large fertilizer requirements relative to soybeans, farmers see strong profit potential for soybeans in the upcoming growing season. The combination may result in U.S. soybean acreage exceeding corn for only the third time in U.S. history.4

Citrus Farmers Face Difficult Conditions

Citrus production forecasts decreased for the year as farmers faced citrus greening, below-average temperatures, and continued supply chain disruptions. Citrus greening, a disease that decreases the size and taste of citrus, has spread through Texas and Florida in recent months. The effects have contributed to a 6.8% price increase for citrus in February alone. Growing demand for products contributed to a 16.2% price increase since February 2021.5

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Tropicana Products, Inc./Naked Juice Company and Other Select Juice Brands Across North America
  • PAI Partners
  • $3,500.00
  • CANarchy
  • Monster Beverage Corporation
  • $330.00
  • 106 Certain Convenience Store Properties located in regions of the U.S.
  • CrossAmerica Partners LP
  • $277.30
  • Shafer Vineyards
  • Starfield Properties, lnc.
  • $250.30
  • Long Beach Exchange
  • PGIM Real Estate; DJM Capital Partners, Inc.
  • $158.20
  • Natural Beverages and Grains Businesses of The J. M. Smucker Company
  • Nexus Capital Management LP
  • $110.00
  • Kings Group and Premium Italian Charcuterie Brands
  • Rigamonti Salumificio S.P.A.
  • $92.60
  • Meier's Wine Cellars, Inc.
  • Vintage Wine Estates, Inc.
  • $35.00
  • MCG, LLC
  • Medicine Man Technologies, Inc.
  • $30.54
  • Assets of Trees Waterfront, Trees MLK and Trees Portland LLC
  • General Cannabis Corp
  • $10.93

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Stonewall Kitchen, LLC
  • TA Associates Management, L.P.
  • n/a
  • The Bardstown Bourbon Company
  • PPC Investment Partners LP
  • n/a
  • Dehy Alfalfa Mills
  • Market Maker Agriculture
  • n/a
  • Readywise, LLC
  • Goode Partners LLC
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Partida Tequila
  • Lucas Bols N.V.
  • $10.00
  • Business Assets of Betterer Foods, Inc.
  • The Planting Hope Company Inc.
  • $7.00
  • All of the assets of Beanfields, PBC
  • Boosh Plant-Based Brands Inc.
  • $4.56
  • Assets Related to Distributing, Marketing and Selling Cannabis Products
  • Double Brow, LLC
  • $3.50
  • Midnight Madness Distilling LLC
  • Millstone Spirits Group LLC
  • $1.40
  • Substantially all of the assets and certain specified liabilities of Dripkit, Inc
  • NuZee, Inc.
  • $0.75
  • Salt Lake Brewing Co., L.C.
  • PRC Restaurant Company, LLC
  • n/a
  • Frontline Food Services, LLC
  • Sodexo S.A.
  • n/a
  • Alaskan pollock operations of Icicle Seafoods, Inc.
  • Westward Seafoods, Inc.
  • n/a

 

Source S&P Capital IQ as of 4/4/2022 and PCE Proprietary Data

PCE Transactions

Contacts

Michael Poole

Orlando Office

407-621-2112 |

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David Jasmund

Orlando Office

407-621-2111 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. December, Ryan. "Russia-Ukraine War Threatens Wheat Supply, Jolts Price." The Wall Street Journal, Dow Jones & Company, Inc., 14 Mar. 2022.
  2. Metinko, Chris. "Why VC Investors Are Plowing Record Sums Into Agtech.” Crunchbase News, 10 Feb. 2022.
  3. Gasparro, Annie. “Supply-Chain Challenges Cost Kraft, Kellogg in Cream Cheese, Cereal Sales.” The Wall Street Journal, Dow Jones & Company, Inc., 16 Feb. 2022.
  4. Maltais, Kirk. “Soybean Prices Surge as South American Outlook Deteriorates.” The Wall Street Journal, Dow Jones & Company, Inc., 12 Feb. 2022.
  5. Casey, Chris. “Citrus prices spike 6.8% in February as weather, disease woes continue.” Food Dive, Industry Drive, 14 Mar. 2022.
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