Food and Beverage M&A Landscape – Late Fall 2018

Mergers and acquisitions (M&A) deal activity in the Food and Beverage industry remains active, with 271 deals closed over the last 12 month (LTM) period ending Oct. 31, 2018. Although M&A activity has not slowed down, the market has not seen any multibillion dollar transactions closing since our Summer 2018 report. The largest transaction was the acquisition of Keystone Foods by Tyson Foods, which valued the company at $2.4 billion. Other large transactions include Keurig Dr Pepper’s $525 million acquisition of Core Nutrition LLC, a producer of organic beverages and bottled water and Amplify Snack Brands’ $420 million acquisition of Pirate Brands LLC, a manufacturer of snack products.

M&A activity in the Food and Beverage industry is still predominately driven by strategic buyers (including companies primarily owned by private equity investors), with strategic transactions representing 88% of total deal flow over the LTM. Of the 271 deals closed in the past 12 months, 185 (68%) were completed by privately owned buyers. 

Overall deal volume slightly lagged in the LTM ending Oct. 31 2018, compared to the same period last year, with 274 deals closed in the same period in 2017. 

This year, the Alcoholic Beverages segment saw the highest level of deal volume, with 40 total transactions in 2018 so far, as buyers targeted craft brewers, distillers and vintners. The vast majority of deals were between private enterprises. Therefore, most transactions did not disclose financial information. The Confectionery/Snacks segment also saw strong activity, with 30 deals, including the Pirate Brands acquisition mentioned earlier, already surpassing the 17 deals seen for all of 2017.

The strong deal flow is likely to continue as many private food and beverage companies are contemplating exit strategies rather than expanding current product development. This will provide opportunities for well-capitalized companies likely to acquire prime assets or merge to support growth.

 

Source: Capital IQ as of Oct. 31 2018. Hemp Industry Daily, BNN Bloomberg.
Note: M&A deal count is defined by a list of subsectors viewed as the best representation of the industry.

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