Food and Beverage M&A Landscape – Spring 2018

M&A deal activity in the food and beverage industry remains active, with more than 260 deals closed over the last twelve month (LTM) period ended March 31, 2018. Mega-sized deals continued to make headlines, with nine transactions closed worth more than $1 billion. The largest transaction seen was Reckitt Benckiser Group’s $17.9 billion acquisition of Mead Johnson Nutritional Company. Mead Johnson manufactures nutritional products for infants. Additionally, Danone acquired The WhiteWave Foods Company, a plant-based foods and beverages manufacturer for $12.5 billion. The next largest transaction was Campbell Soup Company’s acquisition of Snyder’s-Lance, Inc. for $6.1 billion.

The food and beverage industry is predominately driven by strategic buyers (including companies primarily owned by private equity investors) with strategic transactions representing 92% of total deal flow over the LTM. With consumers looking less at brand names and focusing more on natural and organic goods (see page 4), large companies are looking to remain competitive through acquisitions.

Of the 264 deals closed in the past twelve months, 187 (71%) transactions were completed by privately owned buyers. The share price of public companies rose by 3.47% on average on the date of an acquisition announcement, indicating that investors are still optimistic about growth via M&A opportunities.

The demand for locally sourced and organic foods has yet to slow down, leading to the rise of smaller brand names in the industry. The ongoing industry consolidation will likely continue as large established companies look to gain recognition from local brand names and natural/organic food.