The Food and beverage M&A Event of the Year 2022: Super combination, breaking the game and reborn from Nirvana



Although 2022 is not an easy year, but as one of the only two growth industries in the 2022 Hurun World 500, the food and beverage industry still relies on its strong resilience, ushering in the dawn of confidence in carrying forward.

As a "barometer" of the market, mergers and acquisitions can not only be an "engine" for a company to promote business transformation, but also indicate the direction of the industry. In this article, we comprehensively consider the dimensions of deal size, industry influence, market attention and so on, and take stock of the top 10 mergers and acquisitions/transactions in the food and beverage industry in 2022.

(Note: The transaction amount of foreign currency data in this article is uniformly converted according to the exchange rate on January 18, 2023)

Transaction size: 3.5 billion euros (equivalent to about 25.5 billion yuan)

Disclosure date: May 2022

On May 31, 2022, DSM DSM and Firmenich announced that they have entered into a business combination agreement (BCA), which will see the two companies embark on a new journey with DSM-Firmenich.

The deal is the largest in the global food space since IFF bought DuPont's nutrition business for $26.2 billion in 2019.

The merger of DSM and Firmenich is expected to be completed in the first half of 2023. Following the merger, DSM shareholders will own 65.5% of the new company, with Firmenich owning the remaining 34.5% and receiving €3.5 billion in cash.

Founded in 1902 as a mining company, DSM has gradually transformed itself into a health, nutrition and scientific biogiant. Firmenich was founded in 1895 and is now the world's largest privately held fragrance and fragrance company.

"A merger is like a marriage, it requires both parties to share common values. [1] The combination of Firmenich and DSM will create, create and innovate partnerships together in the areas of nutrition, beauty and health.

The combined DSM-Firmenich is expected to achieve sustainable growth of 5-7% per annum over the medium term. At the same time, driven by innovation, the interim adjusted EBITDA margin is 22-23% and annual revenue is expected to increase by approximately 500 million euros.

These two century-old ingredient giants hand in hand, will have a profound impact on the food industry?

On December 12, 2022, Denmark welcomed the largest deal ever, Novozymes (Novozymes) and Chr.Hansen (ChR.Hansen) entered into a merger agreement, expecting to create a leader in biological solutions through the merger. The merger is expected to close in the fourth quarter of 2023 or the first quarter of 2024.

After the merger, the company will operate under the name Novozymes A/S, the former Chr. Hansen company will be dissolved, and CHR. Hansen will be registered as a second name. The new company will remain registered in Denmark and will continue to trade on the NASDAQ Copenhagen Stock Exchange.

According to public information, Novozymes is the world's leading company in industrial enzyme and microbial preparations, with a global market share of more than 40%. Founded in 1874, CHR. Hansen is committed to providing natural biological solutions for food nutrition, pharmaceuticals and agriculture, and has made significant achievements in the field of microbiology.

According to the statement, the potential market size of bio-solutions is expected to reach 15 billion euros, and the economic benefits of bio-solutions manufacturing are expected to triple by 2040. Therefore, the strategic significance of the merger is that the combined group will optimize the joint innovation platform of the two companies, while focusing on providing customers with the world's leading biological solutions, and jointly address and meet society's growing demand for more efficient, scalable and sustainable biological solutions.

The management of both Novozymes and CHR Hansen gave a positive review of the deal. Novo Holdings, the largest shareholder of both Novozymes and CHR Hansen, said the two companies were a "perfect match" and would fully support the proposed merger of the two companies. [2]

How will the combination of two companies with a common goal and complementary strategies show the world the true power of biological solutions?

Transaction size: 525 million yuan

Disclosure date: December 2022

This is the biggest deal of the 2022 new tea circuit.

On December 5, 2022, Nai Xue's Tea announced that it had signed an investment agreement with Lele Tea and would acquire 43.64% of the equity interest of the target company for 525 million yuan. After the completion of the transaction, Nai Xue's Tea will become the largest shareholder of Lele Tea, and Lele Tea will become an associated company of Nai Xue's tea, and will continue to maintain independent operations, maintaining "brand unchanged", "team unchanged" and "operation unchanged".

At this point, Lele tea's twists and turns of "selling oneself" finally drew a full stop. It is reported that since the second half of 2020, Lele Tea has been interested in selling, and many parties are looking for a receiver. In July 2021, it was rumored that Genki Forest and Heicha intended to acquire Lele Tea, but the negotiations ultimately failed.

After more than a year, Nai Snow's tea will be Lele tea in the bag, "the communication between the two sides is very happy, and the progress is smooth." Guo Sihan, deputy general manager of Lele Tea, said this [3].

Founded in 2016, Lele Tea entered the vision of consumers with its two major Internet celebrities, "dirty tea" and "dirty bag", in the early stage of development. The business model is similar to the tea background color of Nai Xue, and they adhere to the direct marketing model, focusing on the product line of "milk tea + soft European buns", and are committed to providing value-added services of "third space".

Nai Xue's tea said that Lele Tea is a very excellent brand, especially in the East China region has better brand strength and consumer cognition.

According to the announcement, Nai Xue's tea will empower Lele Tea in terms of store expansion, supply chain, digitalization and automation, and internal management, helping Lele Tea to further grow. At the same time, the acquisition will help make up for the deficiency of Nai Xue's tea in East China, reduce the cost of future store expansion and operation, and optimize the competitive environment of the industry.

The transaction is the reshaping and integration of the tea drinking head army, marking the official end of the high-end tea "Three kingdoms", and the new market pattern is about to open. 2023, where will the new tea drinkers go?

Deal size: 12.3 billion yuan

Disclosure date: October 2022

On October 25, 2022, China Resources Beer announced that it would acquire 55.19% of the equity of Jinsha Liquor. It is reported that the acquisition involved a total of 12.30 billion yuan, including about 1.03 billion yuan of capital increase to Guizhou Jinsha Liquor and about 11.27 billion yuan of share purchase, which was completed on January 10, 2023.

This is one of the largest mergers and acquisitions in the Maotai-flavored liquor industry in recent years, and from the announcement of the acquisition to the completion of the delivery, China Resources Beer only took more than two months, all of which stems from the liquor layout that China Resources began as early as 2018.

In February 2018, China Resources invested in Fenjiu and became its second largest shareholder. In four years, it acquired Jingzhi and Golden Seed successively, plus the Jinsha Liquor Industry acquired this time. China Resources has shown its ambition in the field of liquor, and has dabble in a variety of flavors such as Luzhou-flavor, sauce-flavor, and sesame flavor, forming a relatively complete product structure of multiple types and multiple price ranges.

Breaking the boundaries may be the only way to find a new growth track, which is one of the important reasons for China Resources to aggressively enter the baijiu track.

The double enabling mode of "white + beer" can not only expand the product diversity of CR beer, but also empower liquor to open up the national market with its own beer sales channels, breaking the traditional regionalism of liquor. The entry of China Resources Beer will also open a broader development space for the Sands wine industry.

In the future, how will China Resources Beer write a chapter in the wine industry? With the ability of China Resources, what kind of achievements can Jinsha Wine create?

Transaction size: $2.9 billion (equivalent to about 19.6 billion yuan)

Disclosure date: June 2022

In early June 2022, Mondelez International announced the acquisition of American organic nutrition energy bar manufacturer Clif Bar&Company for $2.9 billion, the acquisition of brands including Clif, Luna and Clif Kid, it is reported that the deal has been completed in August 2022.

Clif Bar&Company was founded in 1992, focusing on the field of nutrition and organic food and beverage, with the concept of "creating a healthy and sustainable food system", to provide users with low-calorie energy bars and meal replacement bars.

Since 2018, Mondelez International has been adjusting its strategic mix through "buy buy buy", and the acquisition of Clif is its ninth deal since 2018. The acquisition will expand Mondelez's global snack bar business, which also includes U.S. refrigerated snack brand Perfect Snacks and U.K. 's nutritional food brand Grenade, to $1 billion, Mondelez said.

Commenting on the acquisition, Mondelez CEO Drik Van de Put said: "As the company continues to expand its high-growth snack business, these transactions further drive Mondelez's commitment to lead the future of snack food by winning in the chocolate, cookie and baked goods categories. [4]"

As Gen Z consumers pay more attention to healthy snacks, the energy bar market is expanding. According to Euromonitor data, as of the statistical period 2022, the total retail value of the global protein/energy bar market is close to $7 billion.

Of course, Mondelez isn't the only company eyeing the energy bar business. In the energy bar subdivision circuit also occupied Mars, General Mills, Kellogg and other international snack giants, Mondelez's increase will also intensify the competition between snack giants.

It remains to be seen whether Mondelez can win the hearts of consumers on the healthy snack circuit.

Transaction size: 18.4 million euros (equivalent to about 130 million yuan)

Disclosure date: October 2022

On 23 October 2022, Ausnutria issued an acquisition announcement announcing that its indirect wholly-owned subsidiary Ausnutria B.V had entered into a share purchase agreement with Dairy Goat Holland B.V in connection with the acquisition. Ausnutria's indirect wholly-owned subsidiary will acquire 50% of Dutch feta cheese company Amalthea Group for €18.4 million.

Upon completion of the acquisition, Amalthea Group will officially become an Ausnutria associate, but its financial results, assets and liabilities will not be incorporated into the Company's consolidated financial statements.

According to public information, Amalthea B.V (a subsidiary of the Amalthea Group) was established in the Netherlands in 1990 and has been in the development history for more than 30 years, with a market share of about 50% in the Dutch cheese sector and half of the Dutch cheese market.

Through this partnership with Amalthea Group, Ausnutria is expected to increase its supply of fresh goat milk by 45,000 tons per year, and will also enable Ausnutria to control 45 to 50 percent of the Dutch goat milk source, and even help it expand its product portfolio from sheep milk powder to cheese products.

In fact, Ausnutria's expansion into the goat milk sector is not a whim, prior to this, Ausnutria has been working with Amalthea for many years, and the two have formed a joint venture whey powder company - DPC. In addition, as early as 2011, Ausnutria acquired 51% of the shares of the Dutch Hepnok Group through the merger and acquisition. Within 10 years, Ausnutria's goat milk brand "Jabot" has successfully built itself into the world's largest goat milk brand with sales of 3.348 billion yuan [5].

The layout of the whole industry chain of Ausnutria milk will further build a high goat milk "moat" and consolidate its "leader" position.

Transaction size: $1.35 billion (equivalent to about 9.1 billion yuan)

Disclosure date: December 2022

On December 19, 2022, Mondelez International signed an agreement with the European chewing gum and confectionery manufacturer Pfegti Van Meirer Group to sell its developed market chewing gum businesses in the United States, Canada and Europe to Pfegti Van Meirer for $1.35 billion. The transaction is expected to close in the fourth quarter of 2023.

At the same time, Mondelez International will continue to operate its chewing gum business in emerging markets in Latin America, Asia, the Middle East and Africa, and named the flash brand, including the Chinese market.

As early as May 2022, Mondelez said it would divest its chewing gum business in developed markets, and intends to divest the "Holz" brand globally, the deal does not involve the Chinese market.

According to Euromonitor data, in the statistical period from 2020 to 2022, in terms of retail sales, Mondelez Daemai's gum market share in China has increased year by year, from 13.3% to 15.0%, which is also one of the main reasons for Mondelez to retain gum business in China.

But whether that growth can be sustained remains a question mark. Public data show that the retail sales of chewing gum fell from 15.432 billion yuan in 2019 to 13.241 billion yuan in 2021, and the size of China's chewing gum market is shrinking year by year.

To that end, Mondelez is reaffirming its Strategic Plan 2030 to advance the company's strategic portfolio reshaping to enable the company to focus more on its core categories. "From our perspective, Mondelez's revenues and profits will be stronger if we just focus on doing well in the cookie and chocolate business," said Mondelez CEO Pique Fung.

Transaction size: 180 million US dollars (equivalent to about 1.2 billion yuan)

Disclosure date: July 2022

On July 7, 2022, Xianle Health (34.010, 0.57, 1.70%) announced a series of announcements to acquire 80% of the equity of Best Formula Sinc., a leading North American contract manufacturer of nutritional supplements.

The amount to be paid in this transaction is approximately $180 million; In addition, Xianle Health intends to raise no more than 1.35 billion yuan by issuing shares to specific objects for the acquisition of 80% of the equity of Best Formulations and supplementary working capital. On January 6, 2023, Xianle Health successfully completed the cross-border acquisition.

Established in 1986, Best Formulations is mainly engaged in the production and sales of nutritional supplements such as vitamins, minerals and special nutrition products, and has become one of the top three softgel CDMO enterprises in the United States. Data show that from 2019 to 2021, the revenue of Best Formulations softgel products accounted for 73.7%, 76.0% and 70.2% of the total revenue, respectively.

This acquisition is a key measure to complete the layout of the local supply chain in the United States and achieve the "internationalization" strategy of Xianle Health, and to open up the mainstream brand market channels through the rapid establishment of the local manufacturing base in the United States, and form complementary advantages with the company.

Since the acquisition of Ayanda, a well-known European softgel contract manufacturer, in 2016, taking the first step of "going abroad", Sinle Health has continuously expanded its overseas territory, enriched its sales channels, and endeavored to enhance its brand awareness in the world.

With the landing of the company's extended mergers and acquisitions, Xianle's competitive strength in the field of nutrition and health food is further strengthened, and synergies are expected to help the company's share continue to increase.