Food & Agriculture Q3 2019

Q3 Food Agriculture

M&A Transaction Trends

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)

Source S&P Capital IQ as of 10/10/2019 and PCE Proprietary Data

M&A Industry Trends

Two of the Largest U.S. Foodservice Distributors to Merge in a $2 Billion Deal

In early July, Performance Food Group Co. announced its future acquisition of Reinhart Foodservice, LLC for $2 billion. The deal is expected to close by year end pending U.S. federal antitrust clearance and other conditions. The transaction represents a consolidation of the third and fifth largest U.S. foodservice distributors.¹

Bad Weather Predicted to Affect Corn and Soybean Crops

AccuWeather 2019 crop production analysis predicts corn and soybean yields will be down 5.3% and 7.9%, respectively, in 2019 compared to 2018. Corn and soybean harvests are behind schedule, which makes them vulnerable to frost. Both crops were planted late due to wet weather at the beginning of the growing season.²

Start Up Company Genetically Engineers Animal-Free Dairy Cheese

New Culture has closed a $3.5 million seed round led by Evolv Ventures; a venture fund backed by Kraft Heinz. This represents an investment in a new industry using genetically engineered microbes for creating proteins. The San Francisco start up makes animal-free dairy cheese with casein proteins made from microbial fermentation.³

Stock-Only Transaction to Bring Together Two Bottled Water Distributors

The Alkaline Water Co. announced its acquisition of AQUAhydrate in a stock-only transaction. The company plans to create synergies by combining operations, including co-packing facilities and distribution networks. The transaction is expected to close by year end, pending a majority shareholder vote.4

Natural Food & Beverage Market Outpaces Rest of the Industry

The natural food and beverage retail market continues to grow 4% to 5% year over year. The increase represents a much higher growth than the overall food and beverage market, rising 1.7% year over year. Trends show that consumers are more willing to pay a premium for organic, vegan and paleo/grain-free products.5

Environmentally Conscious Consumers are Bringing Change to the Beverage Industry

As plastic pollution has become a major environmental problem, consumer demand for non-recyclable or plastic packaging has declined. Consequently, the beverage industry is turning to aluminum as an alternative packaging for their products. Aluminum is superior to plastic because it requires less energy to recycle and can be reused over and over without losing quality.6

New Technology Capable of Doubling Shelf Life of Produce

Apeel Sciences has developed technology that can double the shelf life of many types of produce by giving it an extra “peel” that decreases the rate of water loss and oxidation. The company is rolling out its technology by installing the Apeel application system to 1,100 Kroger stores. This technology has the potential to decrease food waste and have a global impact on the food system.7

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Largest M&A Transactions Closed

Target Buyer Value($mm)
Food Group of Companies of Services Group of America US Foods, Inc. $1,800.00
Cookies and Fruit Snacks Business of Kellogg Company Ferrero International S.A. $1,300.00
ONE Brands, LLC The Hershey Company $397.00
International Coffee & Tea, LLC Jollibee Worldwide Pte. Ltd. $350.00
Off-Centered Way LLC The Boston Beer Company, Inc. $309.08
Cameron's Coffee and Distribution Company Grupo Nutresa S. A. $113.00
Flagstone Foods, Inc./ Linette Quality Chocolates, Inc. Atlas Holdings LLC $90.00
Green Plains Cattle Company LLC StepStone Group LP; AGR Partners $77.24
Superior Cake Products, Inc. Sara Lee Frozen Bakery $65.00
Spring Oaks Greenhouses, Inc. Green Growth Brands Inc. $49.92

Source S&P Capital IQ as of 10/10/2019 and PCE Proprietary Data

Additional Resources

Keys to Selling Your Food and Agriculture eBook Keys to Selling Your Packaged Food & Beverage eBook

Contacts

Michael Poole

 

Michael Poole

Investment Banking | ESOP

 

407-621-2112

mpoole@pcecompanies.com

David Jasmund

 

David Jasmund

Investment Banking | ESOP

 

407-621-2111

djasmund@pcecompanies.com


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. Karst, Tom. “Performance Food Group Company to Acquire Reinhart Foodservice.” The Packer. July 3, 2019.
  2. Roach, John. “AccuWeather’s latest analysis predicts a poor 2019 yield for corn and soybeans.” AccuWeather. September 7, 2019.
  3. Watson, Elaine. “Kraft Heinz venture fund invests in startup making real cheese… without cows.” Food Navigator USA. September 11, 2019.
  4. Avery, Brad. “Post-Acquisition, Alkaline Water Co. Targets “High Level Synergies” with AQUAhydrate.” BevNet. September 10, 2019.
  5. Wiley, Carol. “Growth of Natural Food and Beverage Outpaces Overall Food and Beverage Market.” Food Industry Executive. September 9, 2019.
  6. Karg, Tarlor. “Beverage Brands adapt to sustainable packaging trends.” Beverage Industry. September 19, 2019.
  7. Tyko, Kelly. “Coming soon to grocer near you: Longer-lasting avocados, courtesy of technology.” Chicago Sun Times. September 23, 2019.
David Jasmund

 

David Jasmund

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Eric Zaleski

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