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Michael Poole

E: mpoole@pcecompanies.com

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Industry Trends

2022’s Biggest Breakup – Kellogg

Kellogg Co. announced in June that it would split into three different snack, cereal, and plant-based food businesses. The decision comes as a number of their legacy brands, including cereal brands, have experienced stagnating growth over the past years. The company believes each business would have significant standalone potential and be more agile when not competing with other segments for resources. The company is expected to complete the tax-free spinoff by the end of 2023.1 2

Consumer Spending Habits Shift as Rising Food Prices Continue

Despite rising costs and inflation, U.S. grocer Kroger Co. outpaced expectations in the first quarter of 2022, with sales increasing 3.8% year-over-year for all sales excluding gasoline. The retailer notes that consumers are changing spending patterns, buying more low-cost brands, and buying foods in bulk. Kroger sales for low-cost brands have increased by 6.3% for the second quarter compared to the first quarter of 2021.3 4

USDA Proposes More Power to Chicken Farmers

On May 26, the USDA proposed new rules requiring U.S. meat companies to disclose chicken farmers' compensation information. The proposal follows the Biden administration's frequent accusations that meat companies use their market power to keep prices high for restaurants while keeping compensation low for farmers. The proposal will require more disclosure by meat processors and contracts that guarantee a certain number of chickens to be purchased from farmers in a year.5

Egg & Poultry Prices Rise as Bird Flue Continues

Since the beginning of 2022, an outbreak of Avian Influenza (Bird Flu) has affected over 40 million U.S. birds across 36 states. Since May 2021, egg and poultry prices have increased by 32.2% and 16.6%, respectively. Egg prices are expected to increase by an additional 3.3% to 4.3% by the end of 2022 as the outbreak spreads. Rising costs for transportation and chicken feed have also contributed to the recent price hikes.6 7

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Tivity Health, Inc.
  • Stone Point Capital LLC
  • $2,058.47
  • Valley Proteins, Inc.
  • Darling Ingredients Inc.
  • $1,100.00
  • Hometown International, Inc.
  • Hometown International, Inc.
  • $420.00
  • Dippin' Dots, LLC
  • J&J Snack Foods Corp.
  • $222.00
  • NuLeaf, Inc.
  • Jushi Holdings Inc.
  • $53.63
  • Assets of InHarvest, Inc.
  • Riviana Foods Inc.
  • $48.75
  • Manufacturing facility of Evans Food Group in Kings Mountain
  • Utz Quality Foods, LLC
  • $39.70
  • Herbal Remedies Dispensaries, LLC
  • Ayr Wellness Inc.
  • $30.00
  • Substantially All Assets of Urban Health & Wellness, Inc
  • Medicine Man Technologies, Inc.
  • $3.22
  • 166-acre corn and soybean Illinois farm
  • Farmland Partners Inc.
  • $2.40

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Austin Cocktails Investments, LLC
  • Constellation Brands Ventures
  • n/a
  • DBW Holdings, LLC
  • Primal Pet Foods, Inc.
  • n/a
  • Sanders Candy, LLC
  • CapVest Partners LLP
  • n/a
  • Tony’s Fresh Market, Inc.
  • Apollo Global Management, Inc.
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Indoor Assets Of HSCP, LLC
  • Grown Rogue Distribution, LLC
  • $2.00
  • Bagger Dave's Burger Tavern, Inc.
  • BT Brands, Inc.
  • $1.26
  • Southern Ice Cream Corporation
  • GlacierPoint Enterprises, Inc.
  • n/a
  • Pet Factory, Inc.
  • Worldwise, Inc.
  • n/a
  • Pacific Ocean Marketplace, Inc.
  • GW Supermarket, Inc.
  • n/a
  • DBW Holdings, LLC
  • Primal Pet Foods, Inc.
  • n/a
  • Premium Nutritional Products, Inc.
  • Manna Pro Products, LLC
  • n/a
  • ALexander Valley Gourmet, LLC
  • Cleveland Kitchen Co.
  • n/a
  • Orgain, Inc.
  • Nestlé Health Science S.A.
  • n/a

 

Source S&P Capital IQ as of 7/11/2022 and PCE Proprietary Data

PCE Transactions

Contacts

Michael Poole

Orlando Office

407-621-2112 |

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David Jasmund

Orlando Office

407-621-2111 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. Lucas, Amelia. “Kellogg to separate into three companies focusing on snacks, cereal and plant-based foods.” CNBC, 21 June, 2022.
  2. Maloney, Jennifer. "U.S. Crackdown on Juul and Smoking: What to Know" WSJ, 24 June, 2022.
  3. Kang, Jaewon. "Inflation-Weary Consumers Shift Shopping Habits, Kroger Says" WSJ, 16 June, 2022.
  4. "Kroger Registers $44.6bn in sales for first quarter of FY22" Retail Insight Network, 17 June, 2022.
  5. Thomas, Patrick, "USDA Proposes New Rules Aimed at Curbing Meatpackers’ Power" WSJ, 26 May, 2022.
  6. "Food Price Outlook", U.S. Department of Agriculuture, 24 June, 2022.
  7. "Changes in Consumer Price Indexes for food", U.S. Department of Agriculuture, 24 June, 2022.
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