Deal making momentum from the second quarter of 2016 was carried forward into the third quarter. Seven acquisitions were announced in June and July, with the pipeline for the rest of the year looking strong.
Acquisitions announced
The acquisition of Patties Foods by Pacific Equity Partners is the most significant transaction announced during the two-month period.
The merger of CFA and Countrywide has increased the membership base of the merged group to 118. With almost $3 billion in revenue, the enlarged Countrywide is now the leading foodservice buying group. JB Metropolitan announced the acquisition of B&F Distributors which adds to the number of transactions in the foodservice distribution sector over the past 12 months. Scale is important in this sector and we expect further consolidation in the foodservice distribution sector over the remainder of the year.
A number of approaches and offers were made over the two months to 31 July 2016, which may lead to transactions, including:
- Macquarie Group making an approach to the South Australian Produce Market; and
- Shanghai Pharmaceutical making a $314 million takeover offer for ASX-listed Vitaco Holdings.
A number of sale processes are expected to progress in the second half of the year including Nature’s Care and Australian Pharmaceutical Manufacturers.
Capital markets transactions
There were no IPO’s of food and beverage businesses on the ASX in the months of June and July 2016. IPO’s in the pipeline for the second half of the year include NZ King Salmon and poultry company Ingham’s Enterprises.
Distribution joint ventures
Beston Global Food Company is in discussions with Korean company, Taekyung Food & Processing to form a strategic alliance to supply food products into the Korean market.
Strong investor appetite for food and beverage businesses, low interest rates and a healthy deal pipeline will drive activity in the second half of 2016.
[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. For more information visit www.cometlineconsulting.com.au.]