Food and beverage mergers and acquisitions in Australia in 2014
Earlier in December 2014, Australian Food News reported that food manufacturing was one of four manufacturing sub-sectors to expand in November 2014, according to the Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI).
In June 2014, Australian Food News reported that business advisory firm Grant Thornton had undertaken research that revealed that the Australian food and beverage industry was ripe with acquisition opportunities. Grant Thornton said it was the time for mid-sized food and beverage businesses to formulate growth plans or exit strategies, in order to maximise the benefit of the increasing number of acquisition and divestment opportunities available in the sector.
International interest in Australian food manufacturers
In November 2014, Australian Food News reported that food manufacturing company Goodman Fielder announced that it was being taken over by Wilmar International Limited (Wilmar) and First Pacific Company Limited (First Pacific), with completion sometime in 2015.
Australia’s two major supermarkets continued to expand in 2014.
Australian Food News reported in November 2014 that Australian supermarket giant Coles had shown strong growth in the first quarter of the 2015 financial year. Coles’ parent company Wesfarmers also reported growth from its home improvement business Bunnings and its office supplies business Officeworks.
In contrast, Australian Food News reported in November 2014 that Australian supermarket giant Woolworths had reported ‘lower than expected’ first quarter sales of $16.2 billion for the 2015 financial year, an increase of 3 per cent on the previous year or 4.1 per cent excluding Petrol. However, Woolworths CEO Grant O’Brien said he was confident Woolworths trading plans would “improve momentum in the second quarter”, which includes the key Christmas period.
Australian Food News reported in September 2014 that Coles’ expansion into Western Australia had received clearance from the ACCC when the regulator announced that it would not oppose the proposed acquisition of three Progressive Supa IGA supermarkets by Coles/Wesfarmers. Metcash Limited had a 45 per cent interest in the Progressive supermarkets.
In September 2014, Australian Food News also reported that the ACCC would not oppose the acquisition by Woolworths of Hudson Building Supplies, which would see Woolworths expand its home improvements offering through Masters, its joint venture with Lowe’s Companies Inc. In December 2014, Australian Food News reported that Woolworths had also acquired China-based wine and drinks distributor, Summergate Fine Wines and Spirits (Summergate).
Australian dairy draws international interest
Interest in Australian dairy assets has grown in recent years due to surging sales in Asia of both traditional products such as milk and cheese and for value-added dairy products such as high-tech nutraceuticals and probiotics. The Australian dairy industry saw several high-profile dairy acquisitions in 2014.
Specialty dairy processor, Longwarry Food Park, based in Victoria’s Gippsland, sold to Italian-owned dairy group Parmalat Australia for $67 million in December 2014. Australian Food News reported in April 2014 that Parmalat Australia had also acquired major Western Australian dairy processor and fruit juice manufacturer Harvey Fresh for about $117 million.
In January 2014, Australian Food News reported that an extended takeover battle for Victorian-based dairy company Warrnambool Cheese and Butter (WCB) was finally won by Canadian dairy company Saputo, which offered $9.40 per WCB share.
Also in January 2014, Australian Food News reported China’s Bright Food Group Co Ltd (Bright Food) had bought Western Australian dairy company Mundella Foods, expanding the conglomerate’s global reach and boosting its exposure to the Australian dairy supply chain. Further acquisitions were made by various other China-backed groups in Victoria and Tasmania in the dairy sector. This follows earlier acquisition in 2013 in a joint venture between New Zealand-based dairy giant Fonterra and Chinese state-owned investment agency China Investment Corporation of Tasmania’s largest dairy farming enterprise the Van Diemen’s Land Company.
In May 2014, Australian Food News reported that Pacific Equity Partners (PEP) had sold ice cream brand Peters Food Group Limited (Peters), one of Australia’s oldest consumer businesses, to UK-based R&R Ice Cream plc (R&R), backed by funds advised by French private equity firm PAI Partners (PAI). The terms of the deal were not disclosed but it was rumoured that the price was in the vicinity of A$450 million.
In August 2014, Australian Food News reported that PZ Cussons Australia and New Zealand, part of leading international consumer products group PZ Cussons Plc, had added to its growing food and nutrition category in the Asia Pacific region with the purchase of highly successful Australian organic yoghurt brand, five:am.
Australia’s largest multi-brand retail food franchisor and leading wholesale coffee roaster, Retail Food Group Limited (RFG), made a number of acquisitions in 2014 that the Company said would be a base for becoming a ‘global franchising powerhouse’.
In November 2014, Australian Food News reported that RFG had announced its entry into a $30 million Share Purchase Agreement (SPA) to acquire the global business and intellectual property assets of the Di Bella Coffee Group (Di Bella Coffee).
The move came not long after RFG announced it had acquired specialist coffee house franchise Gloria Jean’s coffees for $163.5 million cash, $10 million RFG shares, and up to a further $16.4 million conditional upon milestones and earn-out achievements.
RFG owns the Donut King, Brumby’s Bakery, Michel’s Patisserie, bb’s café, Esquires, The Coffee Guy, Café2U, Pizza Capers Gourmet Kitchen and Crust Gourmet Pizza franchise systems. In addition, the Company is a significant wholesale coffee roaster, supplying existing Brand Systems and third party accounts under the Evolution Coffee Roasters Group, Caffe Coffee, Roasted Addiqtion and Barista’s Choice coffee brands.
In 2014, some of Australia’s oldest confectionery companies were acquired by Re:Capital, the Australian arm of UK investment company Hilco Capital.
In October 2014, Australian Food News reported that Re:Capital had acquired Australian confectionery manufacturer Betta Foods and formed of a new holding company, The Confectionery Innovation Group Pty Ltd (Confectionery Innovation Group). The Confectionery Innovation Group also includes Australia’s oldest chocolatier, Ernest Hillier Pty Ltd, which Australian Food News reported in February 2014 had also been acquired by Re:Capital.
This followed the earlier acquisition in 2012 of iconic Australian confectionery company Darrell Lea by the Quinn family, owners of VIP Petfoods. The Quinn family has returned Darrell Lea to profit in 2014 with aggressive cost-cutting.
There was a very major acquisition in the Australian meat processing industry.
In November 2014, Australian Food News reported that Australia’s largest meat processor, marketer and export JBS Australia, which is a subsidy of Brazil-based JBS, had signed a $1.45 billion deal to acquire ham, bacon and smallgoods producer Primo Smallgoods.
The brands of the Primo business include not just Primo but also Hans Continental Smallgoods and Beehive. The Company is Australia’s largest producer of ham, bacon and smallgoods. Primo Smallgoods’ operations include five processing plants operating across Australia as well as New Zealand, employing more than 4,000 people.
The Primo acquisition appears to be an important strategic move by JBS Australia into pork given the global shift towards intensive pork production focused on strong future demand in Asian markets. The transaction is set to leverage the Primo Group’s growing export operations across Asia, including China, and is consistent with the global strategy of JBS to grow its presence in value-added products.
When attempting weight loss it’s important to remember that dietary changes need to be sustainable f...
After 15 years of operations in Australia, Aldi believes that its present 10 per cent market share w...
The Australian Advertising Standards Board (ASB) has dismissed a complaint that accused Aldi of cond...
Food Standards Australia New Zealand (FSANZ) will now permit the sale of low-THC hemp seed products ...
The latest Australian Food and Grocery Council CHEP Retail Index is reporting signs of a modest reco...
In news reminiscent of Woolworths’ Masters home improvement venture, Wesfarmers has reported it will...
Caltex Australia is launching its own start-up accelerator program in hope of disrupting and challen...
Arnott’s has sold savoury biscuits that weight more than one thousand Sydney Harbour Bridges combine...