Warburg and Paulson catch falling knife in bakery 8 Nov 2011 Britain’s biggest food producer is now a struggling penny stock. Two of Premier Foods’ largest investors, Warburg Pincus and John Paulson, appear lousy bargain-hunters. Buying a listed stake probably also hindered Warburg in taking private equity’s typical hands-on approach.
Pfizer milk bid could fortify China’s M&A hopes 25 Oct 2011 Mengniu Dairy’s bid for the U.S. pharma giant’s $10 bln nutrition unit would make strategic sense. China can gain from deals pegged on rising consumer demand rather than cheap labour. Buying foreign brands may also help address food safety problems, if bidders tread carefully.
SAB’s $1.9 bln Turkish tie-up has double benefit 19 Oct 2011 The UK-listed brewer is swapping its Russian unit for a 24 percent stake in Turkey’s Efes. Though Russia is challenging for brewers, the combined business will have a broader base. And SAB is now in pole position if the families behind Turkey’s dominant beer-maker ever sell up.
Del Monte settlement quantifies cost of conflicts 6 Oct 2011 Barclays will surrender a big slug of fees from the $5.3 bln buyout, where it advised the seller and financed the buyer, KKR. Wall Street read the writing on the wall after a judge’s slap. But when banks get spanked on the bottom line, the message resonates loud and clear.
P&G’s Pringles partner warrants careful taste test 26 Sep 2011 The consumer giant wants investors to swap P&G stock for shares in Diamond Foods as part of a $2.4 bln deal to offload the chips brand. But financial wrinkles and angry walnut growers are among possible concerns. P&G holders may want to check the contents of the package closely.
Foster’s gets full measure from SABMiller 21 Sep 2011 Boozy rows between the Australian and UK brewers are history. Like most hostile M&A, this has turned friendly with a sweetener from SAB. Torrid markets and the absence of rival bidders mean Foster’s has done especially well to extract a punchy $10 bln-plus cash offer.
Foster’s comeback to SAB bid just a sharpener 23 Aug 2011 The Aussie brewer promised shareholders an A$500 million payout. That was enough to nudge its shares past SAB’s hostile offer, but is less than it can afford. With SAB yet to make a formal bid, Foster’s has left itself plenty of room for something stronger later.
Kirin pays high price for being late to the party 2 Aug 2011 The Japanese beer group, which like its domestic rivals has belatedly woken up to global M&A, is paying $2.6 billion for 50.45 pct of Brazil’s Schincariol. The brewer, a distant number two, offers a so-so market position - certainly not one worth more than 100 times net income.
Gulf Arab states take up food subsidy outsourcing 21 Jul 2011 Ordering international giants like Kraft, Unilever, Carrefour and even Saudi's Almarai to cap prices minimises the risk of political unrest and helps the kings club avoid even larger subsidy bills. But this increasingly common tactic is a poor answer to rising commodity prices.
Coke suggests U.S. consumers won’t buy price hikes 20 Jul 2011 The beverage giant's volume was flat in North America following modest price increases. That bodes poorly for passing commodity inflation on to customers. Coke can compensate with bubbly emerging market sales. But U.S.centric consumer firms will struggle to maintain margins.
AB InBev has the hops but should avoid Foster’s 8 Jul 2011 The beer giant has almost fully recovered from its AnheuserBusch binge: divestitures are done, leverage is down and synergies captured. That means freedom for management to brew new strategies. But spending a fortune Down Under, instead of in emerging markets, wouldn't be wise.
Foster’s bid poses big FX risks for SABMiller 30 Jun 2011 The $12 bln approach for the Australian brewer comes as the Aussie dollar rides high. Bidder SABMiller can hedge the risks, but only to a point. A shifting currency could wreak havoc on a deal's financial logic or on Foster's investors' willingness to accept it.
Foster’s needs to brew up standalone defence 22 Jun 2011 If SABMiller goes hostile with its $12 bln approach, a winning counterbid for the Australian brewer looks unlikely. Most other big rivals are indebted or chasing racier markets. Foster's needs a selfhelp plan fast to bag a higher offer, if not secure its independence.
SABMiller won’t get Foster’s on the cheap 21 Jun 2011 The UKlisted brewer's $11 bln bid for its Australian peer already looks rich. But if SAB can cut marketing costs and move Foster's upmarket, a deal should create value. While other global brewers are likely to have similar ideas, SAB is in a strong position as a cash bidder.
China’s forbidden market lures global blue-chips 9 Jun 2011 Coke joined HSBC and NYSE to say it wants to list in China, even though the market isn't yet open. Capital controls add difficulty while branding benefits may be limited. But China may still get good business as long as global multinationals feel the need to please regulators.
Food inflation favors corporate strongmen 27 May 2011 Fickle weather, decreasing farmland and more mouths are pushing up prices of wheat and other soft commodities. Companies are now being forced to pass along these costs to consumers. Big brands and proactive market leaders, like McDonald's and Pepsi, stand to brave the storm best.
Diageo should enjoy tequila, in moderation 25 May 2011 The UK drinks group is on the M&A trail again, eyeing up tequila maker Jose Cuervo. A limited number of targets means Diageo has been an infrequent acquirer, and can now afford to fill gaps in its liquor cabinet. With no auction in prospect for Cuervo, Diageo needs to stay sober.
ConAgra needs two more scoops to bag Ralcorp deal 4 May 2011 The Chef BoyardeetoJiffy Pop food group is being stingy with its $4.9 bln hostile bid for the maker of raisin bran and other cereals. At $86 a share, it's offering a real premium of just around 19 pct. But it could afford to pay up to $100. Ralcorp has good reason to resist.
Danisco compromise may be within easy reach 28 Apr 2011 DuPont's $6 billion bid for the Danish food ingredients maker is facing opposition from investors including hedge fund Elliott Associates. There are risks to all sides if the deal falls apart, but a small increase in the U.S. group's offer could satisfy each of the protagonists.
Lactalis braves political risk with Parmalat bid 26 Apr 2011 The French dairy giant has rushed out a 3.4 bln euro offer for the 71 pct of its Italian rival it doesn't already own. The bid is designed to beat an Italian government attempt to thwart the takeover by changing the law. But the lowball offer is a strange way to lure investors.