M&A wrap: Coca-Cola, PepsiCo, SodaStream, Stryker, Invuity

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Giants Coca-Cola Co. (NYSE: KO) and PepsiCo Inc. (Nasdaq: PEP) update their product lines with healthy offerings, while private equity firms, such as Brynwood Partners, breathe new life into tried and true brands, like Pillsbury. And lots of buyers experiment with meal kits and delivery methods, fueling M&A. Coca-Cola is buying a minority stake in sports drink company BodyArmor. The target counts former and current National Basketball Association players Kobe Bryant and James Harden among its investors. The deal expands Coca-Cola's beverage line beyond traditional soft drinks, while it gives Whitestone, New York-based BodyArmor access to Coca-Cola's bottling system. PepsiCo has agreed to buy fizzy-drinks dispenser maker SodaStream International Ltd. (Nasdaq: SODA) for $3.2 billion, sending the company synonymous with sugary sodas into the homes of more health-conscious consumers. Brynwood Partners is acquiring a portfolio of brands from the J.M. Smucker Co. (NYSE: SJM) for $375 million. The portfolio includes the exclusive U.S. rights to the well-known Pillsbury brand’s shelf-stable baking products, along with the Hungry Jack, White Lily, Jim Dandy and Martha White brands. Kroger Co. (NYSE: KR) has agreed to acquire online meal kit maker Home Chef for up to $700 million. "We've long believed that the future of our industry is omni-channel and bigger than just meal kits sold online. We want to be where our customers are and want to help make cooking at home easier, more accessible and even more enjoyable," says Home Chef founder Pat Vihtelic. Read the full story: 9 food & beverage companies loved by consumers and dealmakers alike.

Dealmaking in the sector continues, with MidOcean Partners’ picking up Florida Food Products from Kainos Capital. The target is a manufacturer of vegetable and fruit based ingredients providing clean label services to the food, beverage, and pet nutrition industries. Houlihan Lokey Inc. (NYSE: HLI) and Winston & Strawn advised Florida Food. Gibson Dunn & Crutcher advised MidOcean.

A little more than 30 years ago, when the late Jerome Kohlberg Jr. announced he was leaving KKR & Co. (NYSE: KKR), he told The New York Times that at his new firm, Kohlberg & Co., he’d be focusing on “deals where reason still prevails.” This was a period, observers may recall, when billion-dollar buyouts were still quite rare for private equity firms not named KKR. In fact, the very concept of the “middle market” didn’t yet exist in 1987 and the need to further subdivide the category – adding a boundary between the middle and lower-middle market – wasn’t necessary until at least a decade later. The question that faces sponsors active in these segments today, however, is whether reason still prevails. Read the full story: Does reason still prevail in the middle market?

Deal news
Stryker Corp. (NYSE: SYK) is buying medical technology company Invuity Inc. (Nasdaq: IVTY) for $190 million. Invuity uses advanced photonics and lighted instruments to deliver enhanced visualizations in surgical procedures. Moelis & Co. (NYSE: MC) and Wilson Sonsini Goodrich & Rosati P.C. are advising invuity.

Apax Partners is investing in Paycor, a provider of HR, payroll, time, recruiting, benefit administration services to over 38,000 medium and small-sized companies.

The Carlyle Group LP (Nasdaq: CG) has closed its eighth U.S. real estate fund at $5.5 billion. Since raising its first U.S. real estate fund in 1997, Carlyle has invested $14.6 billion in 747 investments.

Fortive Corp. (NYSE: FTV) has completed its $2 billion acquisition of real estate software company Accruent from Genstar Capital.

Los Angeles-based lower middle-market private equity firm Westhook Capital has raised its inaugural fund at $140 million. Westhook was founded by Michael Hooks, who previously co-founded Black Canyon Capital. Westhook focuses on the business services, consumer, healthcare and industrial sectors.

Prudential Capital Energy Partners, the middle-market mezzanine fund business sponsored by Prudential Capital Group, has raised its first energy mezzanine fund at $343 million. The fund will invest between $10 million to $50 million to fund primarily mezzanine debt investments in the middle-market North American upstream oil and gas, conventional and renewable power sectors.

Tiger Peak Capital has acquired a majority stake in Voice Comm, a provider of supply chain management services to the mobile device accessories industry. McGuireWoods represented Tiger Peak which received financing from Rush Street Capital.

People moves
Patrick Belville has joined Jones Day as an M&A partner. Belville was most recently a vice president and associate general counsel of M&A at Cardinal Health Inc. (NYSE: CAH).

Featured content
"Companies that are inclusive and also diverse tend to outperform companies that aren't," says investor Lorine Pendleton of Pipeline Angels and Portfolia in this video interview shot at Exponent Exchange, a gathering of 200 female dealmakers. Pendleton looks to invest in companies led by diverse entrepreneurs, which she defines as entrepreneurs of color, LGBT entrepreneurs, women, veterans, and disabled entrepreneurs. She also backs companies that have products and services that cater to those markets. "People think that they are niche markets, but they're actually growing in terms of spending dollars and market size." Pendleton spoke on a panel moderated by Mergers & Acquisitions editor-in-chief Mary Kathleen Flynn at Exponent Exchange. For more, see Exponent drew 200 women dealmakers to event featuring Sallie Krawcheck.Watch the full video: M&A Insights: Inclusion investing.

The energy industry is teeming with M&A activity, as companies seek to improve operations. Hubbell and Ingersoll Rand are among the strategic buyers. Private equity firms acquiring include AE Industrial Partners, Clayton, Dubilier & Rice and Genstar Capital. Companies in the energy industry are focused on improving operational efficiencies and analytical capabilities. The issues are urgent for oil and gas companies, because depressed prices mean profits are hard to come by, says Caroline Blitzer Phillips, who advises clients on energy deals as a partner at law firm Vinson & Elkins. They are also essential for renewable energy, which “has been quite expensive in some cases, because the infrastructure is not in place.” From providers of “smart grids” to developers of energy management software, Mergers & Acquisitions looks at recently acquired targets. Read the full story: 14 smart energy deals.

While some of the firms that were instrumental in launching the middle market back in the 1980s and 1990s have long since been shuttered, their legacy lives on. They proved to be excellent training grounds for many successful dealmakers. Heller Financial certainly belongs in this category, and Mergers & Acquisitionsfeatured its alumni a few years ago. Another firm with a far reach is Holleb & Coff, a Chicago law firm that closed in 2000, after a nearly 50-year run. Many of the lawyers who worked at Holleb & Coff back in the day are making a significant impact on M&A today, including: John Corvino, general counsel to the Chicago White Sox; · Brian Kerwin, chair of Duane Morris’ global corporate practice; Theodore (Ted) Koenig, the founder and CEO of Monroe Capital; Kenneth Serota, president of Hu-Friedy Manufacturing Co., and Michelle Warner, general counsel, USG Corp. (NYSE: US). Read the full story: Holleb & Coff alumni: Where are they now?

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