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The robust spate of merger and acquisition activity within the food and beverage industry in the second quarter of 2014 has significantly outperformed the year-ago period, according to PwC's U.S. retail and consumer deals insights Q2 2014 report.
Eight multibillion dollar transactions – notably Tyson Foods' acquisition of Hillshire Brands; DE Master Blenders merging its coffee business with that of Mondelēz International; and Mars' acquisition of certain pet food brands from Procter & Gamble – are driving the trend toward companies seeking a "competitive advantage" and a "holistic consumer experience through a new ‘Total Retail’ business model,” according to Leanne Sardiga, partner and PwC’s U.S. retail & consumer deals leader.
“The quality of businesses for sale is allowing for more corporate buyers who are thirsty for growth to more quickly enhance their value propositions," Sardiga said.
Cargill Acquires Hersey Salt Biz
In the latest example of companies looking toward acquisitions to achieve scale, Cargill this week completed its acquisition of Hersey's salt business from crop nutrition company Mosaic Co., terms of which were not disclosed. Wayzata, Minn.-based Cargill Salt will operate Hersey as a salt facility, producing primarily water softener salt and salt products used in agriculture.
“This is a well-run facility,” said Marcelo Montero, president of Cargill Salt. “Hersey gives us an additional location to provide our customers with a variety of quality products. It will also allow us to compete for new business.”
Cargill Salt has a production facility at St. Clair, Mich., along with other locations in the U.S., the Netherlands and Venezuela.
According to PwC, the three-month period ending June 30, 2014, saw a total of 50 deals in the retail consumer sector with values greater than $50 million, accounting for $37.4 billion in total deal value. PwC's report found that deal value (up 20 percent) and volume (up 32 percent) increased comparatively year-to-date.
Sardiga added that the vigorous M&A activity in the first half of this year has positioned 2014 to outshine the full-year value and volume of 2013.
Based upon what the industry has seen thus far, with its slate of unexpected buyouts, mergers and bidding wars, this is a likely outcome. But as always, time will tell.