Nutella maker Ferrero Group is buying the Famous Amos, Keebler, Mother's and Murray's brands from Kellogg Co. (NYSE: K) for $1.3 billion. Since 2017, Italian food manufacturer Ferrero has acquired several U.S. brands and businesses, and, with this transaction, Ferrero will enter into new strategic product categories and will further strengthen its position in the North American market, says the company. “Kellogg Company’s cookie, fruit snack, ice cream cone and pie crust businesses are an excellent strategic fit for Ferrero as we continue to increase our overall footprint and product offerings in the North American market,” said Giovanni Ferrero, executive chairman of the Ferrero Group. “With this transaction, I look forward to bringing many iconic Kellogg brands into the Ferrero portfolio, to welcoming our new colleagues to the extended Ferrero community, and to continuing Ferrero’s strong track record of growing brands, as we have through our successful acquisitions of Fannie May, Ferrara Candy Company, and the former Nestlé U.S. confectionary business." For Kellogg, the deal is part of a pruning process. "This divestiture is yet another action we have taken to reshape and focus our portfolio, which will lead to reduced complexity, more targeted investment, and better growth," says Kellogg CEO Steve Cahillane. The businesses generated about $900 million sales in 2018. Kellogg is known for the Kellogg's, Corn Flakes, Frosted Flakes, Eggo, Mini-Wheats and Pop-Tarts brands. A number of consumer companies are divesting brands to focus on core businesses. Newell Brands Inc. (NYSE: NWL) reached deals to sell its Pure Fishing division and the Jostens brand. Campbell Soup Co. (NYSE: CPB) has hired Goldman Sachs (NYSE; GS) and Centerview Partners to divest its Campbell International and Campbell Fresh businesses, including the Arnott's, Bolthouse Farms and Garden Fresh Gourmet brands. On the current deal, JP Morgan Securities plc and Davis Polk & Wardwell LLP served as advisors to Ferrero. Advisors to Kellogg include: Evercore Inc. (NYSE: EVR), Goldman Sachs (NYSE: GS) and Wachtell, Lipton, Rosen & Katz.
Excelled. Innovated. Inspired. That’s what the eight winners of Mergers & Acquisitions’ 12th Annual M&A Mid-Market Awards did in 2018. Our awards honor the leading dealmakers and deals that set the standard for transactions in the middle market. In addition to Nike, award winners include: Fortive, TA Associates, the Riverside Co., Harris Williams, Goodwin and Luminate Capital Partners' Hollie Haynes. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.
Related: Read more about Mergers & Acquisitions' three annual special reports, including the M&A Mid-Market Awards, the Rising Stars of Private Equity, and the Most Influential Women in Mid-Market M&A.
Deal news
3i Group is investing in Regional Rail LLC, an owner and operator of short-line freight railroads and rail-related businesses throughout the Mid-Atlantic. Regional Rail provides freight transportation, car storage and transloading services in New York, Pennsylvania and Delaware across three railroads. The target represents 3i's third infrastructure investment in North America since 2007. "The North American transportation market is rapidly evolving and Regional Rail is well positioned to benefit from those changes with future acquisitions," says 3i managing partner Rob Collins.
Willis Towers Watson (Nasdaq: WLTW) is buying Tranzact, a direct-to-consumer healthcare company that links individuals to insurance companies, from Clayton Dubilier & Rice, for up to $1.4 billion. Advisors to Willis include: Bank of America Merrill Lynch and Weil, Gotshal & Manges LLP. Advisors to the sellers include: J.P. Morgan Securities (NYSE: JPM) and Debevoise & Plimpton LLP. Financing is being provided of BofA Merrill Lynch.
Freeman Spogli & Co. has acquired Five Star Food Service Group, which offers office coffee, water, vending machine, along with corporate dining services in the Southeast. Advisors to Five Star include: Piper Jaffray (NYSE: PJC), Finn Dixon & Herling LLP and Evans Harrison Hackett PLLC. The buyer was advised by Morgan Lewis and Bockius. Financing was provided Ares Capital and Varagon Capital Partners.
Cable One is buying Fidelity Communications Co. for about $526 million. Cravath, Swaine & Moore LLP is advising Cable One.
Mill Point Capital has acquired Kemp Technologies. The target's technology helps customers simplify, optimize, analyze and secure their applications across private and multi-cloud environments.
People moves
Dale Araki was hired by K&L Gates as a partner. Previously with Morrison & Foerster, Araki focuses on M&A across Asia and Japan.
Benjamin de Blegiers has joined Weil Gotshal & Manges as a partner. Most recently with Clifford Chance, de Blegiers focuses on private equity and M&A.
Featured content
Michigan State beat overall No. 1 seed Duke, which means the Spartans advance to the NCAA Tournament's Final Four, along with Texas Tech. Virginia and Auburn. This year, March Madness offers fans unprecedented access to online betting, thanks to a May 2018 U.S. Supreme Court ruling. More Americans are expected to place bets on the college basketball tournament than the Super Bowl, with the American Gaming Association's predicting that about $8.5 billion in wagers will be placed on the tournament. Online betting and data companies, including sportsbooks from DraftKings, FanDuel and Caesars, are drawing basketball fans and interest from investors. M&A is rampant throughout the sector. Here's a look at recent online gaming and sports data deals.
Related: March Madness: DraftKings, FanDuel, Action Network draw fans, dealmakers.
The way consumers shop continues to change. Customers want to put their own touch on products, not wait too long for them and in most cases, never step foot in a store to buy them. Apparel and sneaker retailers, such as Nike Inc. (NYSE: NKE), the winner of Mergers & Acquisitions' 2018 Mid-Market Award for Strategic Buyer of the Year, and Foot Locker (NYSE: FL) and Nike Inc. (NYSE: NKE), are embracing these challenges by snatching up companies that help provide customized products to customers. Read the full story: Sports retailers Nike, Foot Locker buy digital startups to help customize sneakers.
What’s driving adaptive reuse, and how can private equity tap into this increasingly common but misunderstood and under-analyzed property segment? Adaptive reuse, which involves repurposing a building designed originally for something else, is fast becoming a global phenomenon; from turn-of-the-century warehouses to castles to train stations, developers and investors have untapped enormous value from obsolete building stock.
Related: Why private equity investors should consider adaptive reuse.
Technology M&A is thriving, and private equity firms are hot on the trail of innovations that will drive sustainable value to customers and make companies more efficient, more effective and less expensive to run. Among the developments appealing to PE investors are: artificial intelligence, data management, data virtualization, digital marketing, healthcare IT, industrial automation, the Internet of Things, machine-to-machine learning, payment processing and Software-as-a-Service. To gain more insights into what kinds of tech deals will dominate the field in 2019, Mergers & Acquisitions reached out to 10 private equity firms that are active investors in technology: Francisco Partners, Genstar, Great Hill, HGGC, Insight, LLR, Riverside, Silver Lake, TA and Vista.
Related: 10 private equity firms share strategies for tech M&A.
In Mergers & Acquisitions' annual look at strategic buyers, we see significant deals aimed at enhancing the customer relationship, including Amazon.com Inc.'s (AMZN) purchase of PillPack, Nike Inc.'s (NYSE: NKE) acquisitions of Invertex Ltd. and Zodiac Inc. and Target Corp.s' (NYSE: TGT) acquisition of Shipt. Technology plays a key role in many transactions. But while technology is enabling developments, it’s not an end unto itself for many corporations. Instead, strategic buyers are using innovations as a means to achieve goals. Based on analyzing hundreds of recent deals, Mergers & Acquisitions has identified seven goals corporate dealmakers hope to accomplish through M&A transactions today: Integrate data with software; improve the customer experience and relationship; expand and improve distribution; process payments more efficiently; leverage tech trends, like autonomous vehicles; make manufacturing processes more efficient; and achieve better outcomes and efficiencies in healthcare. “Strategics have been really active,” says John Neuner, managing director, Harris Williams. “They are aggressive in pursuing the assets they want, as long as it fits within their strategy. Scale is critical to them, and they have to meet consumer demands by adding new capabilities.”
Related: 7 reasons why smart companies Amazon, Nike, Target are doing M&A.
Mergers & Acquisitions profiles the top 28 investment banks of 2018, with KPMG, Houlihan Lokey, Goldman Sachs (NYSE: GS), William Blair and Lincoln International ranking as the five most active investment banks in private equity-backed deals. The list is based on volume of completed PE-backed deals, with PitchBook as the data provider. It was a good year for dealmaking, with activity in the U.S. middle market exceeding $400 billion, the first year to achieve the milestone.
Related: Top investment banks in PE-backed deals: KPMG, Houlihan, GS, William Blair
Related: M&A soared in 2018; companies confident about dealmaking in 2019.
Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital's Sarah Bradley, Kayne Anderson Capital Advisors' Nishita Cummings and Pelham S2K Managers' Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women.
Related: Meet the 2019 Most Influential Women in Mid-Market M&A.
Events
Exponent Women LLC is hosting an evening of networking and conversation with leading economists at the New York office of Alliance Bernstein on April 4. Speakers include Lindsey Piegza, chief economist, Stifel Fixed Income, and Kathleen Fisher, head of wealth and investment strategies, Alliance Bernstein.
InterGrowth 2019 is taking place from May 6-8 at the Waldorf Astoria & Hilton Bonnet Creek in Orlando, Florida.
Innovation Works is holding its second annual AI/Robotics Venture Fair in Pittsburgh from on May 15 and 16.
ACG Chicago is hosting the Midwest Capital Connection at The Marriott Downtown Magnificent Mile from May 21-22.
ACG New York, ACG Boston and ACG Philadlephia are holding the Industrial Conference with Value Creation at the Infor in New York on June 6. The event is part of the Northeast Industry Tour.
ACG Minnesota is hosting the The Upper Midwest ACG Capital Connection at the Renaissance Minneapolis Hotel, The Depot from June 10-11.
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