China competition proves hard for Yum to swallow 9 Oct 2013 The nation is eating less KFC chicken, hurting sales at the chain’s U.S. owner. Last year’s fears of antibiotic-laced Zinger Burgers didn’t help, but fierce competition has also given consumers more dining options. Yum is no longer a great bellwether for Chinese appetites.
China’s dash for dairy based on frothy forecasts 4 Oct 2013 Foamy figures about milk’s popularity in China have lifted share prices of domestic producers, propelled Huishan’s $1.3 bln IPO last week and attracted big investors like Henry Kravis. China’s market size potential is massive, but the rate of growth may be leaner than advertised.
Nestle lacks a good reason to sell L’Oreal 2 Oct 2013 The Swiss foods company may put its 23 bln euro stake in the French cosmetics group up for sale. If Nestle offloads, it is likely to use the money to fund a share buyback. What’s lacking is clear rationale for the KitKat company to make the break.
Huishan Dairy IPO comes with full-fat premium 19 Sep 2013 The Chinese farm operator’s $1.3 billion Hong Kong listing taps a growing thirst for milk. Huishan squeezes more revenue from its herds than rivals, and relies less on commodity markets. But the growth plan looks ambitious for a company with little in the way of a track record.
Suntory pays up to quench thirst for Japan escape 10 Sep 2013 The Japanese firm is spending $2.1 bln on British soft drink brands Ribena and Lucozade. The multiple of almost 14 times EBITDA looks an expensive way to cut exposure to a tough domestic market. But Suntory’s overseas M&A track record should give it the benefit of the doubt.
Nestle miss leaves the shares less than appetising 8 Aug 2013 The Swiss food group says it may fall short of its long-term 5 to 6 pct revenue growth target this year, after achieving only 4 pct in the first half. Investors should ask whether premium-rated Nestle is finding its diverse portfolio of business too broad to manage effectively.
Investors, chew on this: the world wants more meat 7 Aug 2013 As the world gets richer and more urban, tastes get meatier. That places big demands on a fragile planet. But demographics and development also bring financial opportunity. The investment menu runs from fertilisers, seeds and irrigators, and now to burgers grown in the lab.
Lab meat’s sweet spot lies in medicine, not hunger 6 Aug 2013 Growing hamburger in a vat is potentially more efficient and faster than doing so on the hoof. A demonstration in London opens up the possibilities. But the cost of lab-grown materials means they’ll make their mark in the pharma world long before they show up in restaurants.
Milk scare exposes New Zealand’s dairy dependency 5 Aug 2013 A contamination warning from the country’s largest producer has triggered recalls and import bans worldwide. The fallout may be limited, and substitutes in short supply. But with milk products generating a quarter of exports, New Zealand can ill afford a sustained backlash.
China index: Drinking, driving through a slowdown 31 Jul 2013 Demand for liquor, Audis and trucks helped take the edge off China’s slowdown in June. Despite Beijing’s curbs, strong home sales played a supporting role in lifting Breakingviews’ Tea Leaf Index. But exports put the brakes on, falling for the first time since January last year.
Nelson Peltz ends Pepsi’s game of kick the can 18 Jul 2013 The uppity investor went public with a $60 bln plan to crunch together Pepsi’s salty nibbles with the sweet treats of Mondelez, or a carve-up alternative. Both ideas may be Activism 101 but they’re also sensible enough to put the onus on CEO Indra Nooyi to make a strong defense.
Canada’s Weston family bags decent drug deal 15 Jul 2013 Their grocery chain, Loblaw, is buying Shoppers Drug Mart for C$12.4 bln in cash and stock. It’s a smart defense against big-box retailers like Wal-Mart and Target. And though the premium is rich relative to synergies, the deal overall promises to deliver an acceptable return.
Fruity American M&A saga may be about to ripen 12 Jul 2013 Nearly 25 years after it was carved up, Del Monte could be put back together. Along the way, the food giant became part of dealmaking lore, linked to RJR Nabisco, Polly Peck and a landmark conflicts ruling. Del Monte is almost a textbook unto itself for barbarians and bankers.
India grain subsidy may only outsource hunger 10 Jul 2013 A plan to guarantee cheap grains to 800 million citizens will threaten more than the shaky state budget. With the government as a forced buyer, prices in the thinly traded world rice market may spike whenever drought threatens India’s crop, pushing the pain on to poor countries.
Even mediocre M&A deals are getting a thumbs-up 9 Jul 2013 Kroger’s $2.4 bln purchase of rival Harris Teeter looks mildly value-destructive. Savings from combining the grocers equal about half the premium. Yet investors sent Kroger’s stock up. The more puzzling riddle is why so few deals are being done given the market’s hunger for them.
China milk deal leaves small investors whey-faced 19 Jun 2013 Mengniu’s $1.6 billion bid for Yashili gives the target’s founding clan the chance to cozy up to a national champion, and buyout firm Carlyle a good return. Other investors are less fortunate - they will be selling for less than Yashili’s IPO price just three years ago.
Dole buyout harvests fresh Delaware fruit 12 Jun 2013 The CEO’s offer to take the produce purveyor private requires approval from independent directors and minority shareholders. These low-hanging provisions ensure a degree of fairness in such deals. The extra legal protection just afforded by a Delaware judge is the cherry on top.
Wine tariffs won’t end China’s thirst for Bordeaux 7 Jun 2013 It might sound like restricting EU imports would cut Chinese demand for fine wines. But China mostly imports cheap plonk: top vintages tend to trade in offshore centres like Hong Kong. French chateaux have more to fear from China’s anti-corruption drive than from any trade war.
Double arbitrage validates China’s pork purchase 30 May 2013 Why is Shuanghui paying $4.7 billion for U.S. producer Smithfield? Simple: imported pork is cheaper than the Chinese-reared variety, and shoppers will pay up to avoid suspect local produce. With luck, the deal will spark a change in the factors that make it so attractive.
Clean pork powers $4.7 bln China-U.S. meat deal 29 May 2013 Fluorescent pork headlined one PRC food scare. Shuanghui’s planned purchase of Smithfield could help prevent such debacles. For one thing, untainted pigs are cheaper to produce in the U.S. and import to China. As long as the trade goes that way, U.S. watchdogs needn’t worry.