Food Business News - February 23, 2016 - (Page 9)

Editorial EDITORIAL STAFF Editor-in-chief Morton I. Sosland Executive editor, markets Neil N. Sosland Editor L. Joshua Sosland Executive editor Keith Nunes Senior editor, markets Jay S. Sjerven Managing editor Eric J. Schroeder Senior editor, markets Ron Sterk Associate editor Jeff Gelski Assistant editor, markets Laura Lloyd Internet editors Rebekah Schouten Monica Watrous Contributing editor Donna Berry Graphic designer, market graphics, data Christina Sullivan PUBLISHING STAFF Chairman and C.E.O. Charles S. Sosland President L. Joshua Sosland President emeritus Mark Sabo Associate publisher G. Michael Gude David DePaul Bruce Webster North American sales Matt O'Shea Vice-president, chief financial officer Melanie Hepperly Audience development director Don Keating Advertising manager Nora Wages Design services manager Sadowna Conarroe Associate design services manager Ryan Alcantara Circulation manager Whitney Hartman Digital systems analyst Marj Potts Manager of advertising design Becky White Director of e-Business Jon Hall Director of on-line advertising and promotions Carrie Fluegge Promotions marketing manager Jim White WE'RE EAGER TO RECEIVE YOUR FEEDBACK: E-mail or write to us at Food Business News, 4801 Main Street, Suite 650, Kansas City, Mo, 64112 February 23, 2016 MORTON SOSLAND Pickup ahead in food m. & a. activity ith little merger and acquisition activ- willing to take on much larger companies than ity of note occurring in food manu- ever before, in turn often pressing for m. & a. facturing so far during the first quar- steps either to buy or be purchased. Activist ter of 2016, the question may well be asked pressures have prompted a few "going private" whether early forecasts of a continued record- transactions as alternatives to m. & a. involvsetting volume of deal-making will still be real- ing cash or stock exchanges. ized. After all, 2015 is remembered as the year Increasing attention is focused on the exin which the greatest m. & a. activity occurred, pansion of private equity funds established in both food and in consumer products, and solely to buy food companies in specific reearly conditions affecting this year appeared gions or parts of the world. Hundreds of milto be much the same as last year. Yes, there lions have been assembled by private equity are a few notable changes that might cause some caution, but A major influence is the healthy state of most cormost forecasts by investment bankers are confident that 2016 porate balance sheets, reflected in the peak cash will see near repeat of the $1 trillion spent by consumer comholdings as well as cautious borrowing during recent panies on acquisitions last year. That spending, on food, beveryears of global economic uncertainty. age and pharmaceutical companies, accounted for the largest share of the $3.8 trillion paid out managers claiming knowledge about the most in mergers and acquisitions in 2015. Most notable among changes occurring this likely candidates for purchase in the food inyear is the Federal Reserve action in raising dustry as well as how best to manage. In focusing on the financial factors behind its loan rate to banks by 0.25% along with the expectation that additional increases will oc- what still is likely to unfold in the food busicur this year. Yet, borrowing rates, with an ness, sight must not be lost of the once favorupturn of as much as a full percentage point, ite reason given for such transactions - to remain highly attractive. That increase would diversify beyond food a company's product mean borrowing at less than half what it cost line. Industry history includes examples of in 2007, the prior year of m. & a. activity ap- misguided mergers that made once proud food proaching the 2015 peak. Any brake that in- companies into businesses that could hardly terest rate increases impose would be more be recognized as having a role in food. The psychological than practical, considering the industry should be thankful that most of the huge amounts of cash held by corporations in drive to create totally different businesses has America and Europe. A negative vote in the vanished. The one certainty about what lies ahead United Kingdom later this year on continued membership in the European Union could in- for the food industry is the unpredictability of what companies will be the takeover targets terrupt corporate deal-making. Many of the optimistic forecasts were driven and which will be the aggressors. In the past by two considerations. One is that acquisitions year, considerable activity saw smaller comoffer the easiest route to increasing revenues panies turning out to be the buyer. Indeed, in tough markets. Not only is revenue growth recent m. & a. activity in food is marked by an important sign of corporate success but a surprises along this line. While good, as well revenue uptrend generally help improve profit as conventional, business sense points to margins, a measure of management skill. An- acquisition targets made up of smaller entreother major influence is the healthy state of preneurial companies pursuing an especially most corporate balance sheets, reflected in attractive part of the fast changing consumer the peak cash holdings as well as cautious bor- food market, the financial climate does not rowing during recent years of global economic preclude these smaller companies from gouncertainty. Both of these factors gain in im- ing after companies of a size that at one time portance as so-called activist investors are would have been unthinkable. FBN W FOODBUSINESS NEWS ® 9

Table of Contents for the Digital Edition of Food Business News - February 23, 2016

Food Business News - February 23, 2016
Campbell Soup defends G.M.O. labeling decision
Whole grains versatility
Dairy Business News - The many shades of cocoa
Table of Contents
Web Contents
Editorial - Pickup ahead in food m. & a. activity
WhiteWave broadening its Horizon
Pilgrim’s Pride plans sizable strategic investment
Consumers not clear on clean label definition
W.H.O. report urges tax on sugar-sweetened drinks
Snacks ‘area of weakness’ for Kellogg
US Foods files for initial public offering
Beyond Tyson 2.0
General Mills ahead of natural, organic sales goal
Mondelez ‘Lines of the Future’ steadily proliferating
Smucker looks to ‘lead with innovation'
Food business blossoming for
Mars to remove artificial colors across portfolio
Three trends driving gluten-free market
Market Insight - The demise of orange juice
Washington - President’s budget for food safety leans heavily on user fees
Ingredient Trends - Manufacturers responding to non-G.M.O. trend
Whole grain intake still could improve
Is there a U.S. cocoa shortage?
New Food Products
Ingredient Market Trends - Secretary Vilsack says reports demonstrate net energy benefits of ethanol
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - February 23, 2016