Beverage deals sustain consumer staples M&A growth in Q4'20

Multibillion-dollar deals in the beverages sector helped drive year-over-year growth in consumer staples M&A activity in the fourth quarter of 2020.

A total of 480 transactions worth $19.30 billion took place from Oct. 1, 2020, to Dec. 31, 2020. Deal volume rose 25% from 384 deals in the fourth quarter of 2019 while deal value surged 148.7% from $7.76 billion.

However, for full year 2020, M&A activity fell 8.8% in value terms to $75.19 billion from $82.41 billion. The number of transactions also declined 5.9% to 1,536 deals from 1,632 deals in 2019.

Coca-Cola European Partners PLC's planned acquisition of a 69.2% stake in Australian counterpart Coca-Cola Amatil Ltd. for A$8.7 billion, or US$6.82 billion, was the largest transaction in the fourth quarter. Coca-Cola European Partners offered to pay A$12.75 per Amatil share in cash for shareholders other than Coca-Cola and is also in talks with Coca-Cola for the terms of the remaining 20% of Amatil shares.

The second-largest transaction was Shanghai Yuyuan Tourist Mart (Group) Co. Ltd.'s acquisition of a 70% stake in alcohol company Sichuan Tuo Pai She De Group Co. Ltd. for 4.5 billion Chinese yuan, or about $1.5 billion.

Condiments maker McCormick & Co. Inc. acquired hot-sauce brand The Cholula Food Co. Inc. for $800 million in cash, the third-largest in the sector during the fourth quarter. In December 2020, McCormick also acquired privately held flavoring company FONA International Inc. for $710 million in what was the fifth-largest transaction.

Premium Brands Holdings Corp. and a coalition of Mi'kmaq First Nations represented by FNC Holdings agreed to acquire Clearwater Seafoods Inc. for $764.2 million. The transaction was the fourth-largest during the quarter.

The three most active segments in the consumer staples sector all reported increases in deal value.

The beverages subsector reported the highest deal value at $9.80 billion across 43 deals, jumping from $611.4 million across 39 deals in the fourth quarter of 2019.

Food products was the second-best performing segment, in part due to the McCormick deals. Deal value more than doubled to $5 billion across 180 deals, compared to $2.26 billion across 161 deals in the year-ago period. Food and staples retailers reported $2.34 billion in deal value across 93 deals in the fourth quarter of 2020, compared to $160.9 million and 62 deals in the fourth quarter of 2019.