Food and beverage led the way in an otherwise slow quarter for M&A activity, according to PwC’s US Consumer Markets Deals Insights — Q3 2018.
And most of that was in beverages. Coca-Cola’s acquisition of global coffee chain Costa was the only megadeal (>$5 billion) announced in the quarter. The $5.1 billion acquisition accounted for 14% of the total deal value for the quarter.
Overall, while the total deal value ($35.8 billion) in consumer markets was down 50% from Q2, the total deal volume (422) was down only 5%. This suggests that smaller deals are becoming more common.
The food and beverage (including alcohol) segment contributed 78 deals for a total of $14.2 billion. There were also large acquisitions in the related markets of grocery, restaurants, agribusiness, and cannabis (other consumer products).
Taken together, these industries accounted for eight of the Top 10 largest deals in the quarter:
- #1 — Coca-Cola bought Costa for $5.1 billion.
- #2 — Constellation Brands invested $4 billion in cannabis company Canopy Growth Corp.
- #3 — PepsiCo bought SodaStream for $3.2 billion.
- #4 — United Natural Foods Inc. bought SuperValu for $2.9 billion.
- #5 — Roark Capital Management bought Sonic Corp. for $2.3 billion.
- #6 — Tyson Foods bought Keystone Foods for $2.16 billion.
- #8 — US Foods Holding Corp. bought Services Group of America’s Food Group of Companies for $1.8 billion.
- #9 — Archer Daniels Midland Company bought Neovia for $1.8 billion.
Four of these 10 deals are in the food and beverage (including alcohol) subsector. The report states that these “companies are making deals to gain scale and diversify their portfolios with better for you options to remain competitive as consumer tastes and preferences continue to trend towards healthier choices.” Meanwhile, beverage companies are expanding into non-traditional products (i.e., cannabis) to make up for decreased sales of traditional products. Rising food distribution costs are also driving consolidation.
Download the full report to get the details about these deals and consumer markets Q3 M&A overall.
