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Food & beverage deal activity takes a breather

Following a frantic start to 2017, corporate activity in the food and beverage industry slowed down in April and May 2017 with only four transactions announced during this period.

The standout transaction in the quarter was the acquisition of Mainland Poultry by private equity firm, Navis Capital for approximately NZ$300 million. The Mainland Poultry sale process attracted attention from several private equity investors. Looming capital expenditure over the next five years, however was reported to impact the attractiveness of the Mainland Poultry business to a number of interested parties.

Internationally, levels of corporate activity in the food and beverage industry remain high. Kraft Heinz made a surprise U$143 billion proposal to Unilever to merge the two businesses. The aim of the proposal was to build a global consumer goods behemoth. The proposal was however, rejected by Unilever in February. Through the merger proposal received from Kraft Heinz, Unilever conducted a review of the business and initiated a sale process for its spreads business. The Unilever spreads business includes iconic brands such as Flora and Stork.

In Australia, Suntory has announced that it would sell the Cerebos food and instant coffee businesses in Australia and New Zealand. Popular brands that will be offered for sale through the sale process include Gravox, Fountain and Saxa.

Coca Cola Amatil’s investment in SPC Ardmona is also believed to be under review after Coca Cola Amatil reported a $172 million impairment against its investment in the business.

Although deal announcements slowed down in the months of April and May, the market is still active with investors and participants actively pursuing opportunities to grow their businesses through acquisitions and streamlining operations through disposals.

[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]

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