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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (3878)	2/3/2015 11:42:11 AM
From: The Ox	1 Recommendation Recommended By richardred Read Replies (1) \| Respond to of 7159

Wheat and corn prices have been plunging and were in decline most of last year. One would think that these will be helpful to LNCE going forward, so your theory that they may be very attractive to a potential suitor makes a lot of sense. With relatively flat sales expectations, margins would be a great place for them to place a significant focus.

To: richardred who wrote (3878)	4/6/2015 10:23:40 AM
From: richardred	Read Replies (1) \| Respond to of 7159

The Kraft-Heinz Merger: When Organic Growth Is Not On the Menu For the United States’ largest packaged food companies, organic growth is simply not on the menu. Fierce competition, fickle consumers, and lackluster product innovations have combined to make topline growth increasingly hard to come by. During the latest quarter alone, Campbell Soup said sales of its flagship product slumped 6 percent, Kellogg reported a 7.7 percent fourth quarter decline in their U.S. morning foods business and General Mills announced flat cereal sales1. Kraft Foods Group’s merger with H.J. Heinz Company appears to be an attempt to reposition two otherwise stale food companies. Kraft has struggled with less than stellar sales since The Mondelez International split off in 2012. However, according to industry analysts, annual cost savings from Kraft and Heinz synergies could reach $1.5 billion by the end of 20172. In addition, the combined Kraft Heinz Co. will likely put pressure on the rest of the sector to continue expanding via acquisitions in a fragmented, stagnant market. Larger packaged foods companies aren’t the only challenge facing the industry. Just as Chipotle and Shake Shack are challenging traditional fast-food giants like McDonald’s; consumers are looking for fresh, organic and natural groceries in place of Kraft’s canned cheese and sugary Jell-O. Healthy food has become a priority to the American public, and many packaged food makers have been unable to cater to these changes. Even alternative products introduced by packaged food brands simply have not been successful, and the companies have had to look elsewhere for growth. Compounding these issues are pressures from the likes of Walmart, Costco and Whole Foods to reduce costs and improve both the convenience and nutritional value of their products. The changing consumer appetite has forced some leading companies to diversify their product portfolios. One of the quickest ways to achieve this has been through acquisitions. Campbell Soup purchased baby food maker Plum Organics and salad dressing brand Bolthouse Farms in an attempt to target the increasing number of health-conscious shoppers. Other brands, such as J.M. Smucker, have chosen to diversify away from traditional food offerings, announcing plans in February to acquire Big Heart Pet Brands and expand into the rapidly-growing pet food segment. Acquiring organic and natural food companies enables packaged food companies to reclaim lost market share. Smaller, more focused middle market companies are ideal targets for large packaged food companies. For example, Annie’s, Inc., one of the largest natural and organic packaged food companies, was acquired by General Mills in 2014, expanding the reach of the organic food company and providing support for a struggling GM. There are pitfalls for companies trying to become properly positioned. In 2012, ConAgra acquired Ralcorp Holdings, Inc., a private brand packaged food supplier for $4.95 billion, making it the largest producer of store-branded foods in the country3. However, ConAgra struggled to integrate the new business, reporting a 5% decrease in sales for the private brand segment4. Where we stand now, the food sector is ripe for consolidation. The Kraft-Heinz mega-merger suggests deals could continue to accelerate as companies turn to M&A as a means for achieving previously unattainable growth. Along with the presence of increasingly strong competitors and constantly changing consumer demands, it’s either eat or be eaten in the food industry. forbes.com