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ELMWOOD PARK, N.J. - Supermarkets were one of the few sectors of the food industry actively acquiring or merging with other companies in the first half of 2003, the Food Institute reports. Supermarket companies racked up 20 deals -- up from 12 during the first six months of 2002.
A number of companies were buying operations from Fleming Cos., which is divesting its retail operations. One sizeable buy was grocery wholesaler and retailer Roundy's winning bid for 31 Rainbow Foods stores in a bankruptcy auction. Interestingly, the third quarter began with C&S Wholesale Grocers' agreement to acquire Fleming Cos.' wholesale grocery business.
On the whole, food industry merger and acquisition activity was tepid in the first half of 2003, according to The Food Institute. The association tracked 194 transactions, down 11 percent from the same period in 2002 and a drop of 34 percent from the first six months of 2001.
M&A activity among food processing firms held steady at 46 deals versus 49 during the first half of 2002, but investment firms/banks, which were striking a record number of deals in 2002, slowed their pace, making 13 purchases. That was about half of their level of activity from the first half of 2002.
Meanwhile, Spartan Stores Inc. sold 17 Food Town stores in the Toledo, Ohio and Southeast Michigan markets. The Kroger Co. represented the largest purchase, buying 13 of the stores. Spartan also sold its L&L/Jiroch and J.F. Walker convenience distribution unit to The H.T. Hackney Co.
The end of the second quarter saw the FTC approval of the $2.8 billion merger of Nestle Holdings and Dreyer's Grand Ice Cream, after the firms agreed to shed three Dreyer's ice cream brands and Nestle's U.S. distribution assets.
Other notable deals: Wal-Mart Stores agreed to sell its McLane food distribution unit to Warren Buffett's Berkshire Hathaway and announced plans to sell its Merit Distribution Services business to Swift Transportation Co. Starbucks Corp. disclosed a deal to acquire Seattle Coffee Co. from AFC Enterprises in a $72 million transaction, while Pilgrim's Pride Corp. agreed to buy the chicken operations of ConAgra Foods for $590 million deal, making it the No. 2 U.S. chicken producer.