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ELMWOOD PARK, N.J. - Merger and acquisition activity in the food industry plunged in 2002 from the prior year and hit the third lowest mark of total transactions in the past 20 years, according to the Food Institute, a non-profit information and reporting association that monitors M&A activity in more than two dozen food categories.
The group tracked 416 transactions, down 19 percent - or 100 fewer - than in 2001. "Looking at the past two decades, only the recession era of the early nineties saw such few transactions," observed Catherine Pfister, an industry analyst at the Elmwood Park, N.J.-based Food Institute. In 1990 and 1991, 415 and 365 deals were closed, respectively.
Investment firms and banks gobbled up 42 food-related concerns, twice as many as in 2001 and the highest level of deals recorded since the Food Institute began monitoring that category in 1998. "With the economy still weak, this sector had one advantage that other categories may not have had ? access to capital to finance the deals," noted Pfister.
Food retailers made just 26 purchases of other companies, down 42 percent from 2001 and a 51 percent decline from 2000.
Restaurant and foodservice operators made only 48 transactions - the quietest year since 1991 when 33 mergers and acquisitions were completed.
Similarly, food processors have been scaling back on consolidation in the past few years after going on a buying spree throughout much of the late 1990s. With 101 deals under its belt in 2002, the food processor category accounted for 24 percent of the all food industry mergers and acquisitions made last year. It was the lowest level for the category since 1995 and 1996 when 96 deals occurred each year.