M&A and Capital Markets Update - Food and beverage Q1 2014

Food and beverage merger activity declined slightly in the first quarter of 2014, but the trend of large transactions continued as Japanese beverage company Suntory Holdings Ltd. acquired Beam Inc. for a transaction value of $15.8 billion and grocery store chain Albertsons acquired Safeway for a transaction value of approximately $9.4 billion. Deal multiples for food and beverage companies remain relatively elevated at 11.87x. Buyer sentiment seems to be extremely strategic in nature due to the high multiples sellers are receiving and the number of add on acquisitions that are being made by private equity. In the commodity markets, beef prices started to see a slight uptick at the end of 2013 and have continued rising in 2014 to $147 per centum weight, an average Q1 increase of 14.7 percent from Q1-2013.

M&A/food and beverage and capital markets metrics

Commodity prices
     Corn (per bushel)
     Beef (per cwt.)
Valuation and M&A deal activity11.9x
Cash and ST investment of S&P 500 food and beverage companies$45 billion
Private equity capital raised year-to-date$39 billion

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