"US companies are boosting their emerging markets and international presence through M&A activity."
Gregory J. Stemler, Consumer Products Transactions Leader, Americas, Ernst & Young
The two dominant investment themes in Q1 11 were the pursuit of growth opportunities in emerging markets and the search for scale and higher-margin businesses in the developed world.
Below are some deals that highlight broader market trends:
Diageo's Turkish delight. In February, Diageo agreed to purchase Turkey's Mey Içki Sanayi ve Ticaret from private equity groups TPG Capital and Actera for US$2.1b in cash.
Heinz adds Brazil to its emerging markets recipe. The pursuit of emerging market growth opportunities is also the rationale behind the acquisition by H.J. Heinz Company, the world's largest manufacturer of ketchup, of an 80% stake in Coniexpress S.A. Industrias Alimenticias.
PepsiCo's slam dunk. Last December1, PepsiCo announced it was acquiring 66% of leading Russian dairy and juice producer, Wimm-Bill-Dann (WBD) for US$3.6b from a group of the company's shareholders and subsidiaries. That transaction brought PepsiCo's ownership to approximately 77% and, following regulatory approval in January, the company made a tender offer of RUB38.3b (US$1.4b) for the outstanding 23% of WBD shares.
Soap swap. Colgate-Palmolive's purchase of Unilever's Sanex deodorant and bath care products business for €672m (US$947m) reflects the pursuit of higher-margin businesses in the developed world, while Unilever's concurrent purchase of Colgate's Colombian detergents business for US$215m fits the emerging markets theme.
In defense of dairy. In March, General Mills agreed to acquire private equity group PAI Partners' 50% stake in Yoplait for approximately €810m (US$1.1b).
DuPont searching for the right ingredients. The quarter's largest transaction and the only mega-deal, was the offer by E.I. DuPont de Nemours & Co. to acquire Danisco, the Denmark-based global ingredients company, for US$6.3b.
Extracting synergies from Mexican bottling. The pursuit of economies of scale is not confined to the developed markets. The quarter's second largest deal was the US$2.3b all-stock merger of Mexican bottlers Embotelladoras Arca, SA de CV and Grupo Continental SAB (Contal) to form Arca Continental.
Cash is king. In January, Boparan Holdings announced a £342m (US$542m) all-cash offer for Northern Foods, a leading supplier of private label chilled ready meals, salads and sandwiches and owner of the Goodfella's Pizza and Fox's Biscuits brands.
Deals spotlight
1Consumer Products Deals Quarterly - Recovery still building? - October–December 2010
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