Petfood mergers and acquisitions poised to reshape the market
The petfood market is ever more concentrated thanks to hot M&A activity, expected to continue in 2014 and beyond
Petfood is a concentrated, top-heavy market, with the top two companies alone (Mars Petcare and NestlÃ© Purina PetCare) accounting for nearly 50% of sales. The top 30 companies comprise at least 70% of the market (see p. XX). Much of that concentration is due to continued merger and acquisition (M&A) activity, which never really slowed down during the global recession and has really heated up in the past few years. Expect it to continue this year and beyond.
"The private equity community has developed a modest fascination with the pet industry over the past five years," wrote Bryan Jaffe, senior vice president for Cascadia, in 2011. "Interest has accelerated markedly since 2007, as evidenced by deal volume. Notably, deal volume grew from 2009-2010 in contrast to the broader consumer marketplace, which contracted."
For proof, just look at the list Pets International magazine keeps updated on its website, www.petsinfo.net/m&a. While it covers M&A transactions for the entire pet care industry, you'll notice many petfood-related ones as you scroll down the list.
To recap petfood M&A activity of significance over just the past two years:
- April 2012-Merrick acquires Castor & Pollux Natural PetWorks (a little more than a year after being acquired itself by Swander Pace, an investment firm);
- July 2012-Continentale Nutrition is acquired by two investment firms as it merges with Villeneuve Petfood; in August 2013, amid reports of financial difficulty, Continentale sells two of its dry production plants to United Petfood Producers;
- October 2012-C&D Foods acquires Arovit…