Dive Brief:
- Following a year that saw the acquisition of Allied Specialty Foods, an initial public offering and a new president, AdvancePierre Holdings said more mergers and acquisitions could be on the way, according to Food Business News.
- Christopher Sliva, the company's president, said he has seen a trend occurring in the food industry where "flat has become the new normal” when it comes to growth.
- Sliva said as far as deals, the pacing will be dictated more on AdvancePierre's ability to integrate acquisitions rather than any "constraints from our balance sheet." He said the company has "both the resources to rapidly develop and launch new products, combined with the depth and breadth of customer relationships, to execute a series of wins, that when aggregated, make up the steady growth spelled out in our long-term algorithm.”
Dive Insight:
It’s not unusual for a company that goes public to make some big moves, which is exactly what AdvancePierre did last October when it acquired Allied Specialty Foods. The purchase already is having a big impact in net sales and company growth.
With a full year of Allied Specialty Foods, it’s expected the introduction of new products and rejuvenation of some existing ones will help the company's bottom line. Analyst Robert Moskow said last summer the company’s pace of innovation—introducing 543 new SKUs from 2012 to 2015—proves AdvancePierre may be quicker to adapt to trends than other major manufacturers, giving them an advantage.
Company leadership expects more M&A activity in the year ahead, echoing a theme from many analysts who predict 2017 will be a big year for acquisitions in the food space. Last month, Kraft Heinz Co. proposed buying Unilever for $143 billion — an offer that was later withdrawn. For many food companies facing slowing growth, bulking up by acquiring another business so they cut costs and improve operating efficiencies appears to be the smart way forward.