Corporate activity in food & beverage industry looking strong

Corporate activity in the food and beverage industry was high in November and December 2017 with several substantial transactions announced during this period. Deal making momentum has continued in the fourth quarter of 2017 with nine acquisitions announced.

Acquisitions announced

The standout transaction in the quarter was the acquisition of an 85% shareholding in Darrell Lea by Quadrant Private Equity. The transaction values the Darrell Lea business at approximately $200 million. Darrell Lea reported earnings of $23 million in 2017. Quadrant Private Equity also acquired the VIP Petfoods business from the Quinn family in 2015.

In the animal feed sector, private equity firm Adamantem Capital, announced the acquisition of a controlling stake in high performance horse food maker Hygain, for around $150 million.

Anheuser-Busch InBev, the world’s biggest brewer acquired Adelaide based craft brewer, Pirate Life. AB InBev announced that it would inject $10 million into Pirate Life to commission a new brewing facility. The acquisition of Pirate Life follows on AB Inbev’s acquisition of 4 Pines brewery in September 2017.

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Lion acquired a minority stake in Schibello Coffee. Schibello is the owner of the Schibello, Art Caffé and Cleanskin coffee brands and the Paddington Fine Tea and Chocoloco hot chocolate brands. The acquisition is consistent with Lion’s strategy to seek investment opportunities in high growth categories where there are synergies with the Lion business.

Listings on the ASX

Ocean Grown Abalone successfully listed on the Australian Securities Exchange on 17 November 2017 after raising $10 million. The company is positioned to accelerate development of its clean, green and sustainable sea ranching model for quality ocean grown abalone product.

2018 is shaping up to be a dynamic year across the food and beverage industry with strong investor interest in the industry from both trade investors and financial investors.

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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.