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Food and Agriculture Private Equity-Backed Buyout Deals 2006 – 2011 YTD

by Jessica Hull

  • 17 Nov 2011
  • PE

Data shows that 2006 was a bumper year for food and agriculture private equity-backed buyout deals in terms of value, with an aggregate value for the year amounting to $42bn from 122 deals. This is largely explained by a number of high value deals, rather than an overall high number of deals. Deals over $1bn included the largest food and agriculture deal recorded between 2006 and 2011 YTD; the Cerberus-led consortium acquisition of Albertsons LLC for $17.4bn. Another notable deal announced in 2006 was the $7.1bn leveraged buyout of U.S. Foodservice by KKR and Clayton, Dubilier and Rice, Inc. from Royal Ahold N.V.

A total of 154 food and agriculture private equity deals were recorded in 2007, the largest number of such transactions witnessed between 2006 -2011 YTD. This high number of private equity-backed buyout deals can perhaps be attributed to the spike in world food prices at the end of 2007, recorded on the historical FAO food price index.

From 2007 to 2009, the aggregate value of food and agriculture deals remained relatively constant in comparison to the private equity industry as a whole, with such deals falling 34% from $12.9bn in 2007 to $8.4bn in 2009, while the industry as a whole saw aggregate deal value falling by 85% from $641bn in 2007 to $94bn in 2009. These values suggest that the food and agriculture sector has proven to be resilient in the midst of the global financial crisis, perhaps because the industry covers the basic day-to-day requirements of the global population.

Since the end of 2010 into 2011, food prices have began to rise yet again; however we have yet to see a corresponding jump in food and agriculture deal flow, as was observed in similar circumstances in 2007. Despite this, 2010 saw a small peak in the sector, with 129 deals completed at a value of $19.7bn. This represented a 35% increase in the number of deals and more than a doubling in the aggregate value in comparison to 2009, a year that saw 95 deals, worth an aggregate $19.7bn, completed.

In January – November 2011, there have been 113 private equity-backed buyout deals in the food and agriculture sector, with an aggregate value of $6.4bn. Even though the number of deals has remained relatively constant from 2010 to 2011 YTD, there has been a fall back to near 2009 values in terms of aggregate value, reflecting the current global market turbulence and difficult credit conditions.

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