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    Food & Agriculture Q1 2023

    Q1-2023-Food-Agriculture

    Industry Trends

    Food Manufacturers Benefit from High Prices and Falling Ingredient Costs

    In January, food prices rose by 11.3% from the year prior, correcting what manufacturers saw as too-low prices in previous years. While manufacturers expect a slowdown or pause in price increases, they are not expected to decrease. Despite normalizing ingredient prices, manufacturers still face high operating expenses such as labor and transportation.1

    USDA Forecasts Strong Net Farm Income Performance in 2023

    According to the USDA, net farm income in 2023 is expected to be the third highest in history, despite farmers' concerns over interest rate hikes and softening commodity prices. After two record years of net farm income, most farms remain in strong financial conditions. Farmland values also increased by an average of 15% in 2022 alone. The USDA estimates U.S. exports to decline by 6% in 2023 compared to last year's record levels, still the second highest in history.2

    Egg Prices Expected to Drop as Avian Influenza Outbreak Subsides

    Egg prices are expected to moderate in 2022 after months of drastic price increases following the worst Avian Influenza outbreak in U.S. history. According to the Bureau of Labor Statistics, egg prices fell 6.7% in February, with a dozen grade-A eggs costing roughly $4.21. USDA data also shows that the bird population is slowly regrowing and increased by 1% in February. USDA projects a 26.8% fall in egg prices and a 4% increase in production this year. 3

    Apollo to Acquire Univar Solutions for $8.1B

    Apollo Global Management Inc., alongside Abu Dhabi Investment Authority, has agreed to acquire chemical and ingredient distributor Univar Solutions Inc. for $8.1 billion, including debt, in a deal that would be one of the largest leveraged buyouts in recent years. Apollo’s global presence in the food manufacturing, pharmaceutical, and cleaning industries will be strengthened as a result of the purchase. The acquisition agreement includes a financing package of over $4 billion from nine banks and is Apollo’s sixth acquisition announcement this year.4

    Largest Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Back to Nature Foods Company, LLC
    • BA Brussels, LLC
    • $51.40
    • Royal Crown Company, Inc.
    • Macay Holdings, Inc.
    • $45.93
    • Henry's Foods, Inc.
    • AMCON Distributing Company
    • $30.30
    • Soylent Nutrition, Inc.
    • Starco Brands, Inc.
    • $29.43
    • Cardenas Markets, Inc.
    • Longpoint Realty Partners, LP
    • $22.70
    • Yucatan Foods, LLC
    • Flagship Food Group LLC
    • $17.50
    • Turtle Island Foods, Inc.
    • Morinaga Nutritional Foods, Inc.
    • $12.40
    • The Leaf at 73740 LLC
    • Leef Brands Inc.
    • $6.51
    • Bixby Roasting Co.
    • Westrock Coffee Company, LLC
    • $2.65
    • Planet 13 Illinois, LLC
    • Planet 13 Holdings Inc.
    • $1.82

    Other Strategic Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Certain assets, properties, rights and interests of Bridgetown Mushrooms, LLC
    • GrowLife, Inc.
    • $0.84

     

    Source S&P Capital IQ as of 4/10/2023 and PCE Proprietary Data

    PCE Transactions

    eBook- Keys to Selling Your Packaged Food & Beverage Company

    Contacts

    eBook- Keys to Selling Your Agriculture Business

     

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    407-621-2112

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    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. Wiener-Bronner, Danielle. “The cost of food is down, but grocery bills are still up. Here's why.” CNN, 9 March 2023.
    2. Abbott, Chuck. “Farm Finances are Strong, But Rise in Land Values Slows.” Successful Farming, 13 March 2023.
    3. Casey, Chris. “Egg market may be improving ahead of Easter, but bird flu brings unknowns: Wells Fargo,” Food Dive, 28 March 2023.
    4. Cooper, Laura & Thomas, Lauren. “Apollo Global to Buy Univar in $8.1 Billion Deal Including Debt.” The Wall Street Journal, 14 March 2023.

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