Eyes are on former Eastern bloc countries as their new-found place in the EU gives them real potential. Neil Sutton reports
The European Union admitted 10 new states on May 1 and now forms the world’s largest trading bloc, encompassing more than 450 million people in 25 states. It also presents an exciting opportunity for food companies on the acquisition trail, as many of the new member states in Central and Eastern Europe have fragmented consumer product markets with high growth prospects.
In reality, the food M& A market in Europe has already started to shift its focus to the East. In 2003, Central and Eastern Europe equalled the UK’s 63 in terms of the number of food deals completed. Nonetheless, the accession of countries such as Poland, Hungary and the Czech Republic will help remove the fear factor sometimes associated with deals in these countries.
The latest edition of the Food Insights report from PricewaterhouseCoopers reveals that the number of European deals in the food sector held up well in 2003, with only a 7% decline on 2002. Overall in the European M& A market, deal volumes dropped 16%.
The last quarter’s selection of deals show a continued appetite for cross-border transactions. Of the selection below, the two largest are CapVest Equity Partners’ acquisition of Finnish bakery products manufacturer Vaasan & Vaasan from investment fund EQT and Wrigley’s acquisition of Joyco Inversiones’ confectionery operations in Spain, France, Italy, Poland, India and China.
Looking forward, the food industry faces challenges that will impact M&A activity. As food, health and obesity issues continue to make headlines, suppliers are responding to changing consumer priorities through acquisition, diversification and brand disposals. Pressure from government and consumers has led companies such as Kraft and Unilever to modify their product range and we expect diversification to continue.
Companies may also want to acquire ‘healthy brands’ and dispose of those not reflecting a core health and wellbeing focus.
There are also signs that the IPO market is again a more attractive option for corporates, with press reports suggesting that Hicks, Muse, Tate & Furst may float Premier Foods later this year.
The “feeding frenzy” of acquisition by major UK grocers has not yet run its course, as family owners of c-store chains consider their options and the multiples continue to examine how they can benefit from the socio-economic trends, planning restrictions and product range enhancements which are driving the convenience market forward.
n Neil Sutton is head of consumer products, PricewaterhouseCoopers Corporate Finance
DateBuyerTargetDescriptionDeal value
The European Union admitted 10 new states on May 1 and now forms the world’s largest trading bloc, encompassing more than 450 million people in 25 states. It also presents an exciting opportunity for food companies on the acquisition trail, as many of the new member states in Central and Eastern Europe have fragmented consumer product markets with high growth prospects.
In reality, the food M& A market in Europe has already started to shift its focus to the East. In 2003, Central and Eastern Europe equalled the UK’s 63 in terms of the number of food deals completed. Nonetheless, the accession of countries such as Poland, Hungary and the Czech Republic will help remove the fear factor sometimes associated with deals in these countries.
The latest edition of the Food Insights report from PricewaterhouseCoopers reveals that the number of European deals in the food sector held up well in 2003, with only a 7% decline on 2002. Overall in the European M& A market, deal volumes dropped 16%.
The last quarter’s selection of deals show a continued appetite for cross-border transactions. Of the selection below, the two largest are CapVest Equity Partners’ acquisition of Finnish bakery products manufacturer Vaasan & Vaasan from investment fund EQT and Wrigley’s acquisition of Joyco Inversiones’ confectionery operations in Spain, France, Italy, Poland, India and China.
Looking forward, the food industry faces challenges that will impact M&A activity. As food, health and obesity issues continue to make headlines, suppliers are responding to changing consumer priorities through acquisition, diversification and brand disposals. Pressure from government and consumers has led companies such as Kraft and Unilever to modify their product range and we expect diversification to continue.
Companies may also want to acquire ‘healthy brands’ and dispose of those not reflecting a core health and wellbeing focus.
There are also signs that the IPO market is again a more attractive option for corporates, with press reports suggesting that Hicks, Muse, Tate & Furst may float Premier Foods later this year.
The “feeding frenzy” of acquisition by major UK grocers has not yet run its course, as family owners of c-store chains consider their options and the multiples continue to examine how they can benefit from the socio-economic trends, planning restrictions and product range enhancements which are driving the convenience market forward.
DateBuyerTargetDescriptionDeal value
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