As markets change and food and beverage companies evolve to stay competitive, acquisitions and mergers will always be on the table. Last week, we looked a a handful of famous food products with ingredient overhauls happening this year, but today we want to spotlight a few of the expensive purchases and mergers that have dominated headlines in 2013.
Whether you work in meat, beer, food retail or snack cakes, these five deals will be game changers, and their price tags prove how much Kroger, Smithfield and Apollo Global Management have riding on their successes:
1. SHANGHUI INTERNATIONAL HOLDINGS
Acquisition target: Smithfield Foods, Inc.
Cost: $7.1 billion
Smithfield Foods saw a rough breakup this year with its partner Paula Deen, but it found a very wealthy and welcoming new partner in China's Shanghui International Holdings, Ltd. The $7.1 billion deal (including debt) still faces a few challenges, such as a review by the Committee on Foreign Investment in the United States (CFIUS), a shareholder lawsuit over the purchase price and concerns over implications for U.S. food safety. Smithfield CEO Larry Pope maintains that the deal will be great for U.S. agriculture, however, and the company's executives plan to keep on pushing to get the deal finalized.
(Image credit: Flickr user Pickles Halliwell)
2. KROGER CO.
Acquisition target: Harris Teeter Supermarkets Inc.
Cost: $2.44 billion
Kroger announced a $2.44 billion plan to buy Harris Teeter stores at the beginning of July, and the news ignited speculation about what else it might want to buy, as well as a lawsuit over what the grocery giant would pay. Kroger is without a doubt in expansion mode this year, and the chain is not alone. The trend may be part of something bigger—or it may just represent a collective dissatisfaction with business growth in the current economy, as Scott Mushkin, a food retail analyst with Wolfe Research, recently explained to the Washington Post.
(Image credit: Wikimedia Commons)
3. APOLLO GLOBAL MANAGEMENT AND METROPOULOS & CO.
Acquisition target: Hostess Brands
Cost: $410 million
Hostess went into Chapter 11 bankruptcy last year after union negotiations failed to produce an agreement, and by the time the company's brands had all been divided up and sold, Twinkies and the other snack cakes that Hostess is best known for went to Apollo and Metropolous for a cool $410 million. Of course, a few things have changed between when Twinkies left grocery stores and returned on July 15, but the famous cakes are now back—and the union agreements that once governed how they were made is no longer in place.
(Image credit: Hostess)
4. HORMEL FOODS CORPORATION
Acquisition target: Skippy peanut butter (from Unilever)
Cost: $700 million
Hormel gained big-name household product that expanded the Spam owner's reach outside of meat when it agreed to buy Unilever's Skippy business for $700 million earlier this year. The move also gave the company a foothold in China, where Skippy is the No. 1 peanut butter brand. If Skippy continues to rake in $350 million in annual sales for its new owners, the deal should pay off in no time at all.
(Image credit: Flickr user comprock)
5. ANHEUSER-BUSCH INBEV
Acquisition Target: Grupo Model SAB
Cost: $20.1 billion
AB InBev moved to acquire Grupo Model last summer for $20.1 billion, but the deal drew a challenge from the U.S. Department of Justice in January. That anti-comptetiveness suit was ultimately settled, though, with InBev agreeing to sell Modelo's U.S. brands and a Mexican brewery in order to get the deal closed. In the end, we'll see a much bigger company with a substantially strong AB InBev south of the U.S.-Mexican border.
(Image credit: Flickr user gabrielsaldana)
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