Top 10 deals Q2 11
|Buyer name ||Seller name/unit name ||Disclosed value (US$m) ||Announced ||Deal type ||Sector |
|Defitrans SARL (Lactalis) ||Parmalat SpA ||$3,485 ||26/04/2011 ||Corporate ||Food |
|Diamond Foods, Inc. ||Procter & Gamble Co./Pringles Chips Business ||$2,518 ||05/04/2011 ||Corporate ||Food |
|Fomento Economico Mexicano SAB de CV (FEMSA)||Grupo Tampico SA de CV/La Pureza Operations||$780||28/06/2011||Corporate||Beverages|
|EPI SAS ||Remy Cointreau SA/Piper-Heidsieck Compagnie Champenoise SAS||$589||31/05/2011||Corporate||Beverages|
|British American Tobacco PLC ||La Productora Tabacalera de Colombia SA ||$452 ||26/05/2011 ||Corporate ||Tobacco|
|Lassonde Industries, Inc. ||Clement Pappas & Co., Inc. ||$390 ||17/06/2011 ||Corporate ||Food|
|The J. M. Smucker Co. ||Rowland Coffee Roasters, Inc. ||$360 ||16/05/2011 ||Corporate ||Food|
|McCormick & Co.,Inc. ||Kamis SA ||$297 ||28/06/2011 ||Corporate ||Food|
|Diageo PLC ||SABMiller Africa BV/Kenya Breweries Ltd. ||$223 ||06/06/2011 ||Corporate ||Beverages|
|Bakkafrost ||P/F Aller Group A/S/Havsbrun P/F ||$214 ||11/04/2011 ||Corporate ||Food|
“The newly enlarged Lactalis Group will become the world leader for dairy products with nearly €15b in revenues and a presence in 55 countries.” Mike Sills, EY Global Co-Leader, Food
The top 10 deals in Q2 11 had a combined value of $9.3b, 44% lower than the Q1 11 total of $16.7b. The main investment theme in Q2 11 was the pursuit of higher growth and profitability in developed markets through consolidation and more sharply focused portfolios.
Dairy deal leaves Italians sour
The hostile bid by Lactalis for the remaining 71% of Italian food group Parmalat that it did not already own, resulted in the second quarter's largest transaction. However, with Parmalat now in foreign hands there are concerns within Italy that the company's €1.4b cash pile will be stripped out.
Procter & Gamble puts its chips on the table
Procter & Gamble sold its Pringles business to San Francisco-based packaged foods company Diamond Foods. This sale is an example of global consumer products companies sharpening their focus on the faster growing parts of their portfolios and divesting non-core businesses.
Rémy Cointreau sharpens its focus
A top 10 deal that illustrates the focus on higher growth core products is Rémy Cointreau's sale of its champagne business to EPI, a French family-owned luxury group, for an enterprise value of €412.2m (US$589m).
Squeezing more out of the US juice market
Lassonde Industries, the Canadian fruit juice manufacturer purchased Clement Pappas, the privately owned US-based cranberry processor and juice maker, for $390m cash. This is an example of global consumer products companies targeting growth by building scale in mature markets.
Smucker targets Hispanic coffee drinkers
J.M. Smucker's acquired the coffee brands and business operations of Rowland Coffee Roasters for $360 million. The retail coffee segment is already Smucker's largest business and the deal will add Rowland's Hispanic Cafe Bustelo and Cafe Pilon brands to its portfolio, which already includes other acquisitions such as Folgers and Kava.
Capturing the entire value chain
The smallest of the quarter's top 10 deals is a transaction that illustrates a further aspect of the desire to maximize value creation in mature markets — vertical integration. In April, Faroe Islands salmon farming group Bakkafrost, which produces both branded and private label salmon products, agreed to purchase Havsbrún, a producer of fishmeal and fish feed, also based in the Faroe Islands, for DKK1.1b ($214m) in cash and shares.
Further consolidation among Mexico's Coke bottlers
The pursuit of economies of scale through consolidation is widespread in mature markets, but this trend can also be seen in emerging markets. The $2.3b all stock merger of Mexican bottlers Embotelladoras Arca, SA de CV and Grupo Continental SAB (Contal) to form Arca Continental was one of the first quarter's largest deals. That deal created the world's third-largest Coca-Cola bottler, behind Mexico's Coca-Cola FEMSA and Greece's Coca-Cola Hellenic.
BAT gains a significant position in Colombia
While not as dominant a theme as in some previous quarters, Q2 11 still offered three examples of expansion by developed world companies into emerging markets among the top 10 deals. In May, British American Tobacco agreed to purchase Productora Tabacalera de Colombia, (Protabaco) Colombia's second-largest cigarette company for $452m.
Spicing up the growth profile
In June McCormick agreed to acquire Poland's privately-held Kamis for PLZ830m (US$297m) in cash. The deal extends McCormick's presence into Poland and other markets in Central and Eastern Europe.
Diageo and SABMiller go it alone in East Africa
The third top 10 deal in the emerging market expansion category is part of the unwinding of a decade-long partnership between Diageo and SABMiller in East Africa. In June East African Breweries Ltd. (EABL), which is owned by Diageo, agreed to acquire SABMiller's 20% stake in its Kenya Breweries subsidiary for US$223m, giving EABL full control.
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