Food and beverage sector mergers and acquisitions comment – July 2008

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Private equity groups are supposedly feeling the pinch and pulling back from deals but you wouldn’t know this from looking at the food sector.

This month alone we have seen Lion Capital’s announcement that it has agreed to acquire Foodvest, the owner of some of the largest brands in seafood and frozen food, from Capvest in a transaction rumoured to be worth £1.1 billion. At the other end of the scale, Phoenix Private Equity has invested £21.5 million in Busaba Eathai Holdings Limited, a food restaurant chain. Whatever the size of the deal or the market conditions, a VC will still be interested in acquiring food businesses with good brands or market positions, or those with the opportunity to roll out a brand such as Busaba Eathai.

Deals completed in the UK

Serious Food Group, the manufacturer of own-label and branded juices and smoothies, has completed two deals. It has acquired Dutch juice manufacturer Hoogesteger Fresh Specialist BV for €9.2m. The transaction will open up opportunity for growth for the Group across Europe. It has also disposed of Serious Desserts, its desserts business which produces foods like key lime pie, cheese cake and crème brûlée, following a major relaunch of the brand in March. The business, which was acquired by Noble Foods, accounted for less than 5% of the Group’s revenues.

Tate & Lyle plc has disposed of its international sugar trading operations to Bunge. Terms of the deal were not disclosed. The disposal represents another step in Tate & Lyle’s strategy of reducing its exposure to commodity markets.

Royal Wessanen, the Dutch healthy foods group, has acquired the So Good brand and businesses in Europe. Terms of the deal were not disclosed. So Good is the second largest brand in the dairy-alternatives market, offering a range of ambient and chilled soy based beverages. The acquisition, which will be integrated into UK subsidiary Kallo Foods Limited, will further strengthen Wessanen’s dairy-alternatives portfolio.

RAR-Sociedade de Controle, the Portuguese holding company involved in food, transport and packaging, has acquired Vitacress Salads, the UK based farmer of watercress, spinach and rocket, for £52.5m.  

Parripak, the supplier of prepared vegetables and garlic to food manufacturers, has acquired Solway Veg, the Gretna-based supplier of prepared vegetables, for an undisclosed sum. The deal means Parripak now has the ability to supply virtually all of the UK’s food manufacturers.

Unilever has disposed of its Bertolli olive oil and vinegar business to Spanish food firm Grupo SOS Cuetara for £450m. The transaction involves the Bertolli brand in olive oil and vinegar, vegetable-oil brands Maya, Dante and San Giorgio as well as a production facility in Italy. Unilever will retain the Bertolli brand in all other categories, including margarine, pasta sauces and frozen meals. The deal is part of Unilever’s announced plans to dispose of non-strategic brands. vegetable-oil brands Maya, Dante

Lion Capital has agreed to acquire Foodvest for a rumoured £1.1 billion. Foodvest comprises Young’s, the UK’s largest branded seafood group, The Seafood Company, a producer of private-label seafood, and the continental operations of Findus, the leading frozen food business in Scandinavia. The transaction is expected to be completed in September 2008.

Dairy Crest has agreed to sell its Stilton and speciality cheese business to Long Clawson Dairy for £3.5m. The deal will complete at the end of August. The disposal is in line with Dairy Crest’s strategy of focusing on developing its branded and premium private label product range.

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