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Consolidation Trend Continues For Food Processing and Retail Industries.

In its annual Food Business Merger and Acquisition Report, the Food Institute (FI) recorded 753 divestitures among food and food-related companies during 1999 -- the second highest number on record, topped only by 1998's 813 transactions. Once again, food processors were the most active buyers, making 229 acquisitions, one more than in 1998. FI points out that 272 food processing firms were acquired during the year, accounting for more than one-third of the food industry's overall activity. While most were acquired by some type of food processor, three were acquired by agricultural cooperatives, four by Canadian operations, 14 by investment firms and/or banks, and 17 by foreign operations.

The category receiving the most attention from the general press last year was supermarkets, which made 34 acquisitions, according to the report. Approximately 42 supermarket operations were shed during the year as consolidation continued at the retail level, says FI. Among the larger deals reported were Food Lion's acquisition of Hannaford Bros.; Safeway's takeover of Randall's Food Markets and Wild Oats Markets' acquisition of three smaller chains and a number of stores from other operators. One of the largest deals, however, Royal Ahold's acquisition of Pathmark, fell through as Ahold found it could not, or would not, agree to restrictions from the Federal Trade Commission.

Several grocery wholesalers were actively purchasing supermarket chains during the year. Namely, Spartan Stores, which acquired Family Fare and Ashcraft's Markets, and Roundy's which purchased Mega Marts and Ultra Mart. Meanwhile, FI says restaurant and foodservice concerns continued to acquire each other and other concerns (mostly suppliers) during the year. The operations made 112 acquisitions in 1999, down from the prior two years but still more than activity in the early 1990s. One of the more interesting developments during the year, was McDonald's acquisition of the ailing Boston Chicken, Inc. operation as well as the Donato's Pizza chain.

And, who was the most active firm making acquisitions last year? FI says H.J. Heinz was the leader, with seven acquisitions, including Quality Chef Foods, Thermo Pac, Inc., Serv-A-Portion, and significant stakes in four other firms says the report. Other active buyers were: convenience store operator The Pantry (six acquisitions), ConAgra (six), Wild Oats Markets (six), and Sysco, IBP, and Merkert, each with five acquisitions, according to FL.
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Publication:Food & Drink Weekly
Date:Feb 21, 2000
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