M&A and Capital Markets Update - Food and beverage Q2 2014

M&A activity in the food and beverage sector experienced a robust second quarter primarily driven by corporate actions. Sellers are looking to divest of non-core activities and buyers are looking to add additional brands, product lines, or expertise. Notable transactions include Tyson Foods’ $7.7 billion bid of Hillshire Brands, Post’s $2.5 billion acquisition of Michael Foods, the $5 billion merger of coffee giants Modelez International and D.E. Master Blenders 1753, and Mars Inc.’s acquisition of certain pet food brands from Procter and Gamble Company for $2.9 billion. Other divestitures include Nestlé’s sale of Juicy Juice to Brynwood Partners and Unilever’s sale of its pasta sauce brands to Japanese food manufacturer Mizkan Group. As more food and beverage companies continue to be up for sale, and both corporate and private equity buyers look to take advantage of aggressive financing markets, we expect to see a strong second half of 2014.

M&A/food and beverage and capital markets metrics

Commodity prices
     Corn (per bushel)
     Beef (per cwt.)
Valuation and M&A deal activity12.4x
Cash and ST investment of S&P 500 food and beverage companies$46 billion
Private equity capital raised year-to-date$83 billion

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