M&A and Capital Markets Update - Food and beverage Third quarter 2014

Following a strong first half of 2014, US M&A activity in the food & beverage (F&B) sector momentum carried into the third quarter posting another quarter of strong results. Following the announcement of several $1+ billion transactions in first half of the year, Q3 demonstrated that competition for F&B companies isn’t just in the high end. Strategic buyers showed an appetite for smaller food and beverage companies as evidenced by increased deal activity below the $1 billion mark. Strategic buyers accounted for the majority of deal flow as they have been willing to pay higher valuations for strong-performing add-ons. Notable transactions include: the merger of Burger King and Tim Hortons for $11 billion, General Mills purchase of Annie’s for $820 million, Ajinomoto’s purchase of Windsor foods for $800 million, and JAB Holding Co. taking Einstein Bro’s Bagels private in a $374 million deal. Other announcements include Apollo-backed Chuck E. Cheese’s merger with Peter Piper Pizza for an undisclosed amount and Shake Shack’s upcoming IPO seeking a valuation of $1 billion. As both private equity and strategic buyers continue to take advantage of the strong market conditions, we expect deal flow in the highly-coveted food & beverage sector to remain strong through the end of the year and into 2015.

M&A/food and beverage and capital markets metrics

Commodity prices
     Corn (per bushel)
     Beef (per cwt.)
Valuation and M&A deal activity12.3x
Cash and ST investment of S&P 500 food and beverage companies$49 billion
Private equity capital raised year-to-date$127 billion

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