Private Equity-Backed Buyout Food & Agriculture Deals Globally - January 2013

by Gemma Morris

  • 18 Jan 2013
  • PE

Looking at the prominence of private equity-backed food and agriculture buyout deals globally from 2006 to present, there was a 22% drop in the number of deals between H1 and H2 2006, when there were 69 and 54 deals respectively. Throughout 2007 and 2008, the number of deals remained fairly consistent, peaking at 84 deals during H1 2007, with a low of 70 deals in H2 2008. However, there was a significant 91% decrease in the aggregate value of deals between H1 2006 and H2 2007, demonstrating that the general value of deals had decreased since 2006.

Coinciding with the financial crisis in 2008/2009, the number of deals reached a low of 49 in H1 2009, and the aggregate value remained at low levels, reaching $8.5bn in 2009, similar to the $9.2bn in 2008. Activity picked up in H2 2010, with the number of deals increasing to 77, and the aggregate value of deals rapidly increasing by 381%, from $3.4bn in H1 2010 to $16.4bn in H2 2010. The largest deal of 2010 in the food and agriculture industry which contributed to this peak was the $5.3bn acquisition of Del Monte Foods Company, led by Kohlberg Kravis Roberts, along with Centerview Partners and Vestar Capital Partners.

From 2010 onwards, aggregate deal value settled to lower values, ranging between $4.8bn and $2.3bn from H1 2011 to H2 2012. H1 2012 saw the highest number of private equity-backed buyout deals within the food and agriculture industry between 2006 and H2 2012, with 90 deals. The closest comparison since 2006 to this value is H1 2007, when there were84 deals; however the aggregate value from H1 2007 was significantly higher at $12.6bn in comparison to the mere $2.8bn that represents the aggregate value of the 90 deals that took place during H1 2012.

Looking at the breakdown of deals within the food and agriculture industry by region, the market was dominated by European deals between 2006 and 2008, with 45% of the global number of food and agriculture deals in Europe in 2008. This shifts from 2009 onwards, where North America takes over as the dominant region; in 2012, 47% of deals took place in this region compared to just 30% in Europe. This decrease in European deals is understandable considering the recent economic crises the region has experienced. The proportion of deals in the Asia region reached a high in 2009 at 18%, however since this point this has has steadily decreased, falling to 11% in 2012. Conversely, there is an increasing prominence of deals from regions in Rest of World, which in 2011 and 2012 made up 13% and 12% of the proportion of total deals in this industry respectively, significantly higher than the 7% proportion of deals from such regions in 2010.

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