August and September 2016 recorded high levels of corporate activity in the food and beverage sector. A total of 10 acquisitions were announced over the two-month period with expectations for a strong finish to the year.
The standout transaction was the acquisition of Snack Brands Australia (which counts the pictured Kettle Chips amongst its products) by Universal Robina Corp for $600 million. Universal Robina acquired Snack Brands from a consortium of investors, led by the Real McCoy Snackfood Co, who in turn acquired Snack Brands from Arnott’s Biscuits in 2008 for an undisclosed sum. Arnott’s asking price for the Snack Brands business in 2008 was said to be $30 million.
Other significant transactions include:
- The acquisition of Hudson Pacific Corporation by Retail Food Group for $88 million.
- The acquisition of Australian Pharmaceutical Manufacturers by Pact Group for $90 million, priced at 6.5x 2016 EBITDA.
- The merger of Perfection Fresh and Fruitmaster to create Australia’s largest table grape grower and marketer.
Capilano Honey announced that it had sold its Manuka beekeeping assets for $9.2 million to a 50/50 joint venture with Comvita. It also acquired a 50% shareholding in a Western Australian honey producer for $2.5 million.
Distribution and supply joint ventures
New distribution and supply joint ventures include:
- A2 Milk Company and Synlait Milk entered into a 5-year agreement for the supply of a2 Platinum infant formula. The new arrangement is expected to progress future growth plans.
- TerraVia and Nestlé Purina PetCare entered into a global joint development agreement targeting the companion animal market. The agreement will leverage algae based advanced nutrition ingredients developed by TerraVia.
- Beston Global Food Company announced that it established a kids nutrition joint venture with Singapore based Mindchamps Holdings to supply fresh and nutritious food to pre-school children in Singapore.
A healthy deal pipeline is expected to drive corporate activity for the remainder of the year.
[Ben van der Westhuizen and David Baveystock are directors of Comet Line Consulting, an advisory business that specialises in acquisitions and divestments within the Australian food & beverage industry]