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Consumer Product Deals Quarterly - Q2 12 - Focus on rapid-growth markets drives resurgence in big-ticket deals - EY - Global

Consumer Product Deals Quarterly: Q2 12

Focus on rapid-growth markets drives resurgence in big-ticket deals

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"Consumer products companies are acquiring businesses for cash, increasing their exposure to rapid-growth markets where possible and also playing to their strengths in existing categories within their heartlands." Andrew Cosgrove, Global Consumer Products, Lead Analyst.

The top 10 deals in Q2 12 had a combined value of US$43.6b, 85% of total deal value. There were two megadeals, with values of more than US$5b in the quarter.

Of the top 10 deals, five were in the beverage sector and five were in the food sector. All the buyers were corporates, and private equity was the seller in three deals.

Top 10 deals

Top 10 deals in Q2 2012

Top 10 deals in Q2 12

AB InBev gains exposure to Mexico

At the end of June, AB InBev announced the US$20.1b all-cash purchase of the remaining 49.7% it did not already own in Mexican beer giant Modelo. AB InBev, already the world’s largest brewer, will gain increased exposure to the Mexican market, which is growing at 3% per year and where Modelo is the biggest brewer.

In a related transaction, Constellation Brands bought Modelo’s 50% stake in Crown Imports, the US distribution joint venture between Constellation and Modelo, for US$1.9b.

Nestlé wins the battle for Pfizer infant nutrition

The second quarter’s other megadeal, announced in April, was Nestlé’s acquisition of Pfizer’s infant-nutrition business for US$11.9b in cash. Nestlé outbid Groupe Danone to secure the deal, which is the largest in the company’s history.

Molson Coors looks east

At the start of April, US-Canadian brewer Molson Coors announced it had agreed to buy StarBev, the Eastern European brewer of Staropramen, from private equity group CVC for US$3.5b in cash, debt and convertible bonds.

Bright Food opts for an English breakfast

In May, Bright Food, one of China’s largest food groups, agreed to buy a 60% stake in British breakfast cereal maker Weetabix from private equity group Lion Capital for US$1.9b. Bright Food and Lion Capital said the acquisition signals that the Chinese food company will enter both the British and global food markets through the iconic Weetabix brand.

Asahi strengthens its domestic portfolio

Japan’s Asahi Group agreed to acquire Japanese beverage maker Calpis for US$1.5b (Yen 120b) in cash from food and seasoning maker Ajinomoto. Asahi has diverse food and beverage businesses, including Japan’s top-selling beer, Asahi Super Dry.

General Mills expands in Brazil

During the quarter General Mills signed a definitive agreement to acquire Yoki Alimentos, a privately held food company based in Brazil for an estimated US$962m. The deal will provide General Mills with a strong portfolio of local snack and convenience meal brands.

Danone tightens its grip on Moroccan dairy leader

At the end of the quarter, French food group Danone announced it had taken a majority stake in Moroccan dairy firm Centrale Laitière, which is the country’s leading dairy product company with nearly 60% of the market. Danone increased its stake, which it has held since 2001, from 29% to 67% by buying part of the stake owned by Societe Nationale d’Investissement, a local holding company, for US$686m.

UCC leverages the yen’s strength

In April, Japan’s biggest coffee maker, UCC Holdings, announced it had agreed to buy Switzerland’s United Coffee from private equity firm CapVest Equity Partners for an undisclosed sum. Estimates placed the deal’s value at US$616m.

Beam whips up a storm

Rounding out the top 10 deals, Beam, which makes Jim Beam bourbon, purchased the Pinnacle Vodka and Calico Jack rum brands from privately owned White Rock Distilleries for US$605m. Pinnacle pioneered the dessert-flavored vodka category with Pinnacle Whipped Vodka in 2010, which has since grown into the most popular flavored-vodka brand in the U.S.

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