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Consumer Products Deals Quarterly, October-December 2010 - Emerging markets dominate top 10 deals - EY - Global

Consumer Products Deals Quarterly, October-December 2010

Emerging markets dominate
top 10 deals

  • Share
Buyer name Seller name/unit name Disclosed value (US$m) Announced Deal type Sector
KKR & Co. LP plus others Del Monte Foods Co. 5,300 25 November 2010 PE Food
Shuanghui Group, Rotary Vortex,Shuanghui Development* Shuanghui Group, Rotary Vortex, Shuanghui Development* 4,840 26 November 2010 Corporate Food
PepsiCo, Inc. Wimm-Bill-Dann Foods OJSC 3,603 2 December 2010 Corporate Beverages
Nestlé SA/L'Oréal SA Q-Med AB 992 13 December 2010 Corporate HPC
Grupo Bimbo SAB de CV Sara Lee Corp./North American Bakery Ops 959 9 November 2010 Corporate Food
Noble Group Ltd. Cerradinho Holding SA/Catanduva & Potirandaba Mills 951 20 December 2010 Corporate Food
Reckitt Benckiser Group PLC Actis LLP/Paras Pharmaceuticals Ltd. 722 13 December 2010 Corporate HPC
Ebro Foods SA Ricegrowers Ltd. 580 21 October 2010 Corporate Food
Coty, Inc. TJoy Holdings Ltd. 400 5 December 2010 Corporate HPC
SS National Logistics Co. Ltd. Serm Suk Public Co. Ltd. 373 22 October 2010 Corporate Beverages

"The KKR consortium's purchase of Del Monte sees the return of private equity to the megadeal size for the first time since the M&A market bottomed out."
David Murray,
Global Consumer Products,
Transactions Leader.

Summary: The top 10 deals in Q4 10 had a total value of US$18.7b, with one deal falling into the megadeal category. Six of the top 10 deals included an emerging market as the destination, while four of the top 10 transactions featured emerging market companies as buyers.

Top 10 deals in 2010

The vast majority of the year's top 10 deals had values in the US$3b to US$5b range, with the food sector accounting for half of the transactions. US-based companies were present as buyers in five deals and as sellers in five deals. Three of the top 10 largest deals in 2010 occurred in Q4 10.

The average size of deals in the top 10 varied more in 2010 than in 2009. The average size of a top 10 deal has increased from US$2.4b in 2009 to US$5.7b in 2010, a 136% increase (US$3.3b).

The top 10 deals in 2010

Deals spotlight

Below are some deals that highlight broader market trends:

Milk deals in Russia: In December 2010, PepsiCo announced it was acquiring 66% of leading Russian dairy and juice producer WBD for US$3.6b — a transaction that will make the US company the largest food and drink business in Russia.

Local power on the rise: Local companies in emerging markets are fighting back against Western companies' growth. In October 2010, for example, SS National Logistics Co. acquired 32% of Thai non-alcoholic beverage group Serm Suk, for US$373m. Serm Suk has been the local bottler for PepsiCo for the past 53 years.

HPC players looking East for growth: In December, Reckitt Benckiser announced it had agreed to buy Indian branded personal care and OTC drugs group Paras from its PE owners for US$722m.

Mexico's new global challenger: November, Mexico's Grupo Bimbo, the world's largest bread maker, acquired Sara Lee Corp.'s North American bakery business for US$951m. The transaction includes the right to the Sara Lee brand for bakery goods in the US and regional brands such as Heiner's and Rainbo.

Nobel diversification: Noble Group, the Hong Kong-headquartered agribusiness group, acquired two sugar mills from Brazilian ethanol producer Grupo Cerradinho for an enterprise value of US$951m. The deal represents both an increase in market presence for Noble in Brazil, where the group already owns two sugar mills, and also a diversification of its revenue streams.

Pet food deals: In November, a consortium of KKR=(the majority buyer), Vestar Capital and Centerview Partners bought Del Monte Foods for US$19 a share in a take-private deal. The transaction's enterprise value of US$5.3b, edges into our megadeal category and is the first time that PE, albeit in a consortium, has agreed to a deal of this size since the M&A market peaked in 2007.

Pet foods account for about 45% of Del Monte's revenues, but about 60% of its profits. KKR will gain access to Meow Mix cat food and Milk-Bone dog biscuits.

Beauty markets: In December 2010, Galderma, the dermatology joint venture between L'Oréal and Nestlé, announced a tender offer for Stockholm-based Q-Med, a producer of high-quality medical implants for aesthetic and medical use.

Rice sales: In Q4 2010, Spanish food group Ebro Foods, the world's biggest branded rice company and second-largest branded pasta maker, announced the US$580m (AU$600m) purchase of Australia's Ricegrowers Limited. In a separate transaction, Ebro purchased the rice division of Spanish olive oil producer, SOS, for US$260m.

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