Are decreasing mergers and acquisitions here to stay or a one-year wonder?

 

August 14, 2019

527.

That figure represents the total number of mergers and acquisitions in the food service industry, according to the Food Institute’s annual Food Business Mergers and Acquisitions report. It sounds like a big number, but that 527 represents an 11 percent drop over such business in 2017.

Is it a sign of the times or an anomaly?

Looking more closely at the numbers

A total of 527 mergers and acquisitions were made but who did the dealing?

Investment firms, retailers and manufacturers were the most active, involved in more than half of the 527 deals. Individually, Marathon Petroleum’s $23.3 billion acquisition of Andeavor was the biggest deal of the year, followed by Walmart’s acquiring Flipkart for $16 billion. Sainsbury’s purchase of Asda was also a $10 billion deal while Alibaba bought out Ele.Me for a price of $9.5 billion.

Pinnacle Foods and Conagra Brands combined for the largest merger at $10.9 billion.

Breaking the data down geographically, California led the nation in companies that were acquired with 44 corporate headquarters located in the sunshine state. Illinois was second with 28, led by Chicago which topped all individual cities as being the site for 12 acquired companies. Texas (21), New York (19), Colorado (15) and Wisconsin (15) rounded out the top five states that saw the most activity involving local firms.

Making sense of these acquisition figures

So, is the dip in last year’s mergers and acquisitions the start of a new trend or an anomaly? It’s too early to tell, particularly until the remainder of 2019 plays out. Previous years in the decade have seen a flurry of activity on the M&A front so it’s only natural that the trend would slow. After all, while 2017 saw 587 mergers and acquisitions, there were only 505 in 2016.

While 2018 was a down year for mergers and acquisitions, companies will never sour to the prospect of acquiring a hot new upstart that shapes the future of the industry with a new product or capitalization on a current trend.

As we look to the remainder of 2019, the deal that may be most telling in the future of food and foodservice was a relatively small $2.8-billion-dollar deal in January of 2018. That was the deal that saw Nestle sell its candy business to Ferrero. Nestle then turned around and bought a vitamin company.

Yes, a company synonymous with chocolate now sells vitamins instead. It’s a poignant reminder that companies of all sizes must shift and adjust with the changing preferences of our marketplace. The ability to do so may just determine where we all stand on the list of mergers and acquisitions in the years ahead.

< Back