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Consumer Products Deals Quarterly - Q3 2011 - Beverage dominates top 10 deals - EY - Global

Consumer Products Deals Quarterly: Q3 2011

Beverage dominates top 10 deals

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Top 10 deals Q3 11

Buyer nameSeller name/Unit nameDisclosed value (US$m)AnnouncedDeal typeSector
SABMiller PLCFoster’s Group Ltd.$10,79321/09/2011CorporateBeverages
Kirin Holdings Co. Ltd.Aleadri-Schinni Participaçoes E Representacoes SA (Schincariol)$2,52301/08/2011CorporateBeverages
Nestle SAHsu Fu Chi International Ltd.$1,69811/07/2011CorporateFood
Asahi Group Holdings Ltd.Pacific Equity Partners Pty Led./Unitas Capital Pty Ltd./Flavoured Beverages Group Holdings Ltd.$1,26007/08/2011CorporateBeverages
CJ Cheiljedang Corp.Asiana Airlines, Inc./Daewoo Electronic Components Co., Ltd./Korea Express Co., Ltd.$86708/07/2011CorporateFood
Formendo Economic Mexicano SAB de CV (Coca Cola FEMSA)Grupo Embotelladoras CIMSA SA de CV/Corporacion de los Ángeles SA de CV$83419/09/2011CorporateBeverages
PepsiCo Inc.Grupo Embotelladoras Unidas/Geusa SA de CV-Beverage$62518/07/2011CorporateBeverages
China Resources Enterprises Ltd.Jiangxi Hongkelong Investment Group Co., Ltd./ Jiangxi Hongkelong Department Store Investment Co., Ltd.$57329/07/2011CorporateBeverages
Ralcorp Holdings, Inc.Sara Lee Corp./North American refrigerated dough business$54509/08/2011CorporateFood
Thai Beverage Public Co. Ltd.PepsiCo, Inc./SS National Logistics Co., Ltd./Serm Suk Public Co. Ltd.$51309/09/2011CorporateBeverages

The third quarter top 10 deals provided two examples of emerging market consumer products conglomerates making non-consumer product acquisitions.

The top 10 deals in the third quarter were dominated by the beverage sector, which accounted for seven of the 10 transactions, including the megadeal acquisition of Foster’s by SABMiller.

Top 10 deals Q3 11

SABMiller swallows Foster’s

The third quarter’s largest transaction and its only megadeal was the purchase of Foster’s by SABMiller in September for US$10.8b in cash. A takeover had been expected following Foster’s demerger earlier this year of its loss-making wine business into a listed group, Treasury Wine Estates.

Kirin’s Brazilian entry

Japan’s Kirin Holdings announced that it had paid US$2.5b for Aleadri-Schinni Participações e Representações, which holds a 50.45% stake in Schincariol, the Brazilian beer and soft drinks producer. It was the second-largest deal in the quarter and illustrates the ongoing expansion into faster-growing emerging markets by developed world beverage companies.

Asahi builds out its Asian network

Japan’s Asahi Group Holdings agreed in August to buy New Zealand’s Flavoured Beverages Group Holdings Ltd for US$1.3b from private equity firms Unitas and Pacific Equity Partners. Asahi is pursuing a regional expansion strategy.

Further consolidation among Mexico’s soft drink bottlers

The third quarter provided further evidence of the pursuit of economies of scale through consolidation in the Mexican soft drink bottling market. Coca-Cola FEMSA, a bottling joint venture of Coca-Cola Co. and Mexican drinks group FEMSA (which bought the beverage business of privately owned domestic bottler Grupo Tampico in June), announced the purchase of Corporación de Los Ángeles, SA de CV (Grupo CIMSA) in an all-share transaction worth US$834m.

Local power on display at Serm Suk

In September, Thai Beverage, Thailand’s largest beer and whiskey maker, agreed to buy Serm Suk, the local bottler of Pepsi beverages, for US$513m. Thai Beverage has bought PepsiCo’s 42% stake for THB58 per share and launched a tender offer for the remaining shares at the same price.

Nestlé’s sweet tooth

In July, Nestlé announced that it had agreed to buy a 60% stake in Hsu Fu Chi, a leading Chinese confectionery manufacturer and distributor, from the founding Hsu family for US$1.7b. The deal is Nestlé’s second in China this year: in April, the Swiss manufacturer bought a 60% stake in Yinlu Food Groups, which makes peanut-flavored drinks and canned rice porridge.

Show me the dough

Ralcorp Holdings, the US private label food group, in August announced that it had purchased Sara Lee’s North American private brand refrigerated dough business for US$545m. For Ralcorp, the deal represents part of its strategy to increase its focus on private label. For Sara Lee, the transaction follows its decision at the start of the year to split into two publicly traded companies.

Capturing more of the value chain

The third quarter top 10 deals provided two examples of emerging market consumer products conglomerates making non-consumer product acquisitions aimed at strengthening their position in local distribution networks or supply chains. The first example is CJ CheilJedang Corp., a food and beverage manufacturing affiliate of South Korea’s CJ Group, acquiring an 18.8% stake in logistics firm Korea Express for US$867m.

The second example is beverage, food and retailing conglomerate China Resources Enterprise Ltd. (CRE) announcing it had agreed to buy department store and supermarket chain Jiangxi Hongkelong Department Store Investment Co. for US$573m in order to expand its retail division.

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Consumer Products Deals Quarterly: Q3 2011

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