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Food & beverage deal activity starts the year strongly

Corporate activity in the food and beverage industry was unexpectedly high in February and March 2017 with a number of transactions announced during this period.

The standout transaction in the quarter was the acquisition of Allied Mills by Pacific Equity Partners from Graincorp and Cargill Australia. The proposed strategy is to integrate Allied Mills with the Pinnacle bakery business that PEP acquired in March 2015. PEP has been an active acquirer in the bakery industry over the past 12 months with several bolt-on acquisitions concluded for the Pinnacle business.

The organic and health food sectors were active with the acquisition of wholesale distributors Australian Organics (Pacific Organics) and Kadac by Murray River Organics and New Development Corporation respectively. Health food chain Healthy Life was also acquired by Allegro Funds.

The two deals in the pet food sector were both concluded by Real Pet Food Company. Real Pet Food Company acquired NZ-based Bombay Petfoods and pet food manufacturer Consolidated Manufacturing Enterprises. These two acquisition are in addition to the two domestic and one international acquisition concluded by Real Pet Food Company in 2016.

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Four food and beverage companies listed on the ASX over the two-month period. Three of the four companies that listed on the ASX have a strong customer focus on the Chinese market.

Deal activity in the first three months of 2017 has started strongly. The food and beverage sector remains highly attractive for investors looking to tap into consumer spend in Australia and Asia.

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[Ben van der Westhuizen and David Baveystock are directors of Comet Line Consulting, an advisory business that specialises in acquisitions and divestments within the Australian food & beverage industry. For more information visit www.cometlineconsulting.com.au]

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