Food M&A in 2014 continued to follow consumer eating habits, guiding investors and buyers to stock up on better-for-you brands and frozen food companies. Several companies, including General Mills Inc. (NYSE: GIS), made significant middle-market acquisitions to broaden their offerings for more health-conscious consumers. Here are five significant food transactions we saw in 2014.
1. The Hillshire Brands Co. paid $165 million to grow in the frozen food space with the acquisition of Van's Natural Foods in a deal announced in April. Phoenix-based Van's, which was sold by PE firm Catterton Partners, sells frozen breakfast and snack foods, including waffles, pancakes, cereal, crackers and snack bars. Hillshire, known for owning the Jimmy Dean, Ball Park, Hillshire Farm, Slate Fair, Sara Lee frozen bakery and Chef Pierre brands, expects the deal to strengthen its presence in the frozen food category. The deal pre-dated a multi-billion dollar bidding war for Hillshire, which resulted in a $7.7 billion takeover from Tyson Foods Inc. that closed in August.
2. In June, TreeHouse Foods agreed to buy Gryphon Investors-backed Flagstone Foods for $860 million, bringing in a line of nuts and private-label healthy snacks. Flagstone Foods, which was formed through Gryphon's acquisitions of Ann's House of Nuts and American Importing Co. in 2010, makes branded and private-label healthy snack foods. The deal allowed TreeHouse to continue building up its private label offerings, following the $150 million purchase of Portenergy Natural Foods, which makes private- and corporate-label soups, broth and gravies, in April.
3. Hormel Foods Corp. (NYSE: HRL) bulked up with the acquisition of CytoSport Holdings Inc., the maker of protein supplement brand Muscle Milk, in a $450 million deal that was announced in July. The acquisition of the Bencia, California-based supplement company should help Hormel grow its specialty foods segment. The Austin-based buyer owns food brands including Spam, Jennie-O and Hormel Chili.
4. Amid growing consumer interest in healthy eating, General Mills agreed to buy Annie's Inc. for about $820 million in a deal announced in September. The transaction adds a popular line of organic foods to General Mills, which is known for the Cheerios, Bisquick and Yoplait brands. The buyer also owns many traditional brands, including Betty Crocker, Pillsbury and Totino's.
5. Ajinomoto Co. Inc. announced a deal for Quality Holdings LP for $800 million in September, adding the Ling Ling, Josè Olè, Tai Pei, Bernardi, VIP, Chili Bowl, Fred’s, Golden Tiger, Posada and Whitey brands to the company. Those food lines are sold in more than 80,000 stores. For Tokyo-based Ajinomoto, which makes seasonings, processed foods, beverages and other products, the deal grants access to North America's growing frozen food market.
6. Peet's Coffee & Tea Inc. partnered with private equity firm Next World Group to buy Mighty Leaf Tea in a move to accelerate the company's tea business, in a deal announced in August. Mighty Leaf, a San Rafael, California-based operation, is known for artisan, blended teas in a compostable, mesh tea pouch. Peet's, which went private in 2012, is working to expand its coffee shop empire, and added dozens of shops in 2014. The deal mirrored Starbucks Corp.'s (Nasdaq: SBUX) $620 million acquisition of Teavana in 2012, which it bought to expand in the tea category. Starbucks won Mergers & Acquisitions M&A Mid-Market Deal of the Year Award for 2012 because of the Teavana transaction.