Food Companies A Popular Target For Investment Firms

Investors are hot for food food companies lately, with one of the bigger deals on that front closing recently, BJ's Wholesale Club acquisition by affiliates of Leonard Green & Partners, L.P. in an all-cash $2.8 billion deal.

Investors are hot for food food companies lately, with one of the bigger deals on that front closing recently, BJ's Wholesale Club acquisition by affiliates of Leonard Green & Partners, L.P. in an all-cash $2.8 billion deal. And for those that do not know it, BJ's gets almost two-thirds of its sales from groceries and has 190 locations mainly in the northeastern region of the U.S. according to The Food Institute. It is by far, the largest acquisition of a food retailer this year but no the only one by an investment firm.

Indeed, that deal is just the tip of the iceberg as far as investment firms getting involved with food companies this year. In the third quarter of 2011 alone, the Food Institute’s Merger & Acquisition database recorded 15 deals by investment firms and and the food industry from manufacturers to retailers. Those deals accounted for one-fifth of the 77 food industry divestitures the Food Institute tallied in in the third quarter.

What were some of the other deals? The year started out with the closure of the agreement by private equity firm Thomas H. Lee Partners to purchase Acosta Sales and Marketing from AEA Investors. Acosta is a full-service sales and marketing agency in the consumer packaged goods industry, has more than 17,000 associates in 65 locations throughout the U.S. and Canada.

A group of private investors including Chanticleer Holdings Inc. acquired Hooters of America Inc. from the estate of Robert Brooks. The investor group also acquired Texas Wings Inc., the largest Hooters franchisee.

And last week, Trian which had been looking to acquire Family Dollar stores, agreed to keep just a 10% stake in the firm and a seat on the board.

Overall, food industry merger and acquisition activity continues to trend upward this year, with The Food Institute reporting on 273 deals through the first three quarters of 2011- twenty more deals than a year earlier.

After investment firms, the most active category tracked was food processors, for which 11 deals were recorded. This included LiDestri Food & Beverage’s purchase M.H. Zeigler's & Sons, LLC, Lansdale, PA cider and beverage maker, and Canada’s Lassonde Industries acquisition of cranberry and juice processor Clement Pappas and Company, Inc.

To keep abreast of all of this activity, don’t forget to turn to The Food Institute which has been tracking mergers and acquisitions in the food industry since 1928. Its online database is the only one of its kind available to the food industry and is the basis for its annual Merger and Acquisition report. For more just go to www.foodinstitute.com.