Supermarkets were one of the few sectors of the food industry acquiring or merging with other companies in the first half of 2003, racking up 20 deals—up from 12 during the first six months of 2002.
A number of these involved Fleming Companies, which is divesting its retail operations. One sizeable buy was grocery wholesaler and retailer Roundy’s winning bid for 31 Rainbow Foods stores in a bankruptcy auction. The third quarter began with C&S Wholesale Grocers agreeing to acquire Fleming’s wholesale grocery business.
On the whole, food industry merger and acquisition (M&A) activity was tepid in the first half of 2003. The Food Institute tracked 194 transactions, down 11% from the same period in 2002 and a drop of 34% from the first six months of 2001.
Meanwhile, Spartan Stores Inc sold 17 Food Town stores in the Toledo OH and southeast Michigan markets. The Kroger Co represented the largest purchase, buying 13 of the stores.
The end of the second quarter saw the Federal Trade Commission approve the $2.8 billion merger of Nestlé Holdings and Dreyer’s Grand Ice Cream, after the firms agreed to shed three Dreyer’s ice cream brands and Nestlé’s United States distribution assets.
Other M&A deals: Wal-Mart Stores agreed to sell its McLane distribution unit to Warren Buffett’s Berkshire Hathaway and announced plans to sell its Merit Distribution Services business to Swift Transportation Co. Pilgrim’s Pride Corp agreed to buy the chicken operations of ConAgra Foods in a $590 million deal, making it the number two US chicken producer.
