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Consumer Product Deals Quarterly - Q1 12 - Emerging markets show two-way traffic growth in deals - EY - Global

Consumer Product Deals Quarterly: Q1 12

Emerging markets show two-way traffic growth in deals

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"The high level of cash on corporate balance sheets is enabling companies to move quickly when presented with the right opportunity." David Murray, Global Consumer Products Transactions Leader

The top 10 deals in the first quarter of 2012 had a combined value of US$6.4b, representing 86% of the total disclosed deal value for the period.

Of the top 10, five deals were in the food sector, three in beverage and the remaining two in household and personal care. There were no mega deals and only two deals had a value greater than US$1b.

Top 10 deals in Q1 12

Buyer Name Buyer country Seller name Seller country Disclosed Value*
Announced Deal type Sector CB or IB
Kellogg Co United States Procter & Gamble Co-Pringles United States $2,695 2/15/2012 Corporate Food In-Border
Carlsberg A/S Denmark Baltika Russian Fed $1,220 2/20/2012 Corporate Beverages Cross-border
Embotelladora Andina SA Chile Embotelladoras Coca-Cola Polar Chile $805 2/2/2012 Corporate Beverages In-Border
Royal Friesland Campina NV Netherlands Alaska Milk Corp Philippines $458 3/9/2012 Corporate Food Cross Border
Theo Müller Germany Robert Wiseman Dairies PLC United Kingdom $422 1/13/2012 Corporate Food Cross-border
Svenska Cellulosa AB Sweden Everbeauty Corp Taiwan $290 2/25/2012 Corporate HPC Cross Border
Olam International Ltd Singapore Titanium Holding Co SA Nigeria $167 2/9/2012 Corporate Food Cross-border
Anadolu Efes Biracilik ve Malt Turkey Al Waha Iraq $134 2/3/2012 Corporate Beverages Cross-border
Nisshin Seifun Group Inc Japan Miller Milling Co United States $122 2/27/2012 Corporate Food Cross-border
LG Household & Health Care Ltd South Korea Ginza Stefany Cosmetics Co Ltd Japan $$118 1/26/2012 Corporate HPC Cross-border

Source: EY's Analysis of Thomson Reuters Data

*The disclosed value is the total value of consideration paid by the acquiror, excluding fees and expenses. The dollar value includes the amount paid for all common stock, common stock equivalents, preferred stock, debt, options, assets, warrants, and stake purchases made within six months of the announcement date of the transaction. Liabilities assumed are included in the value if they are publicly disclosed. Preferred stock is only included if it is being acquired as part of a 100% acquisition. If a portion of the consideration paid by the acquiror is common stock, the stock is valued using the closing price on the last full trading day prior to the announcement of the terms of the stock swap. If the exchange ratio of shares offered changes, the stock is valued based on its closing price on the last full trading date prior to the date of the exchange ratio change. For public target 100% acquisitions, the number of shares at date of announcement is used.

Kellogg hungry for international expansion

The quarter’s largest deal was Kellogg’s agreement to purchase Procter & Gamble’s Pringles potato chip business for US$2.7b in cash after the proposed sale of Pringles to Diamond Foods in a debt and stock-based deal worth US$2.35b.

Top 10 deals in Q1 12

Top 10 deals in Q1 12

Carlsberg tightens its grip in Russia

In February, Carlsberg announced plans to buy the remaining 15% minority stake in its Russian division Baltika for US$1.2b through a voluntary cash offer. Carlsberg is the market leader in the Russian beer market, which accounts for about 40% of the Danish brewer’s revenues, but is facing challenging market conditions.

Further consolidation in Latin America soft drink bottling market

In a deal worth US$805m, Embotelladora Andina agreed to merge with soft drinks producer and distributor Embotelladoras Coca-Cola Polar, through an exchange of shares. The merger aims to consolidate Andina’s leading position in the Latin American bottling business with operations in Argentina, Chile, Paraguay and Brazil.

Dutch dairy group looks east

The Netherland’s Royal FrieslandCampina, the world’s fourth largest dairy company, announced plans to spend up to US$458m to buy the remaining shares in Alaska Milk Corp. FrieslandCampina has agreed to buy the stake of Alaska’s founding Uytengsu family for US$302.5 million, which will increase its holding in the Manila-listed company from 8.1% to 68.9%.

To fulfill local regulatory requirements, FrieslandCampina will tender for the remaining outstanding shares at the same price, which could cost up to a further US$155m.

Integration in the UK dairy sector

In January, Theo Müller, the privately owned German dairy group best known for its yogurts and creamed rice, announced the £279.5m (US$422m) cash takeover of Robert Wiseman Dairies, the UK’s biggest milk producer.

SCA’s portfolio transformation continues

At the end of February, Svenska Cellulosa AB agreed to purchase Everbeauty for US$290m on a debt-free basis. Everbeauty is a leading Asian personal care products company with sales in China, Taiwan and Southeast Asia. Within incontinence care products, the company holds a number two position in China and a number one position in Taiwan.

Olam expands downstream in West Africa

Further evidence of the vertical integration and emerging market expansion themes is Olam International’s announcement that it had acquired Titanium Holding Company for US$167m.

Anadolu/Coca-Cola expand in Iraqi soft drinks market

Turkish beverage group Anadolu Efes and Coca-Cola agreed to acquire an 85% interest in Iraq’s Al Waha for Soft Drinks Mineral Water & Juices LLC (Al Waha) for US$134m. Anadolu Efes is the largest shareholder of Coca-Cola İçecek conducting Coca-Cola operations both in Turkey and international markets. The stake in Al Waha has been purchased by Waha Beverages, a Netherlands-registered subsidiary of Coca-Cola İçecek, and in turn Coca-Cola has indirectly taken a 23.6% stake in the Dutch investment vehicle.

Nisshin Seifun leverages the strong yen

The first quarter provided further evidence of Japanese companies using the strength of the yen to help make acquisitions in overseas markets. In March Nisshin Seifun Group Inc., reached an agreement to acquire all the shares of Miller Milling Co., a US-based producer of durum and hard wheat flours for breads, buns, muffins and tortillas, for US$122m.

LG broadens its portfolio in Japan

South Korea’s LG Household & Healthcare in January announced the acquisition of Japan-based cosmetics company Ginza Stefany Cosmetics. Initially, LG will pay US$118m for a 70% stake in Ginza and purchase the remaining 30% within three years.

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