Pet food treat and other product makers Best Friend Group Oy and Vital Petfood Group pet food division will merge to form: Nordic Pet Care A/S, reported Global Pets. Meanwhile, wild bird, caged bird and rodent food will continue independently under Nordic Pet Care Group, but will be renamed as VPG Wildbird A/S. The merger will create one of the largest Scandanavian pet food, treat and other products companies. VPG Wildbird produces more than one million wild bird fat balls daily, which are sold across Europe.
Mergers and acquisitions in the pet food industry
In the May 2019 issue of Petfood Industry magazine, we highlighted the world’s top pet food companies. Among those companies were three with significant growth in 2018 due to acquisitions — United Petfood Producers, ADM Pet Nutrition and J.M. Smucker — and neither the consolidation nor the boost in growth are surprising, reported managing editor Lindsay Beaton. Pet food is a mature market in several parts of the world, and while there’s still a lot to be said for consumer growth in the more developing regional markets, companies making their money particularly in North America and western Europe are looking for additional ways to continue gaining market share. M&A activity is one of the ways being taken significant advantage of (Petfood Industry reported on 51 different pet food-related mergers and acquisitions in 2018).
The strategy of M&A
Mergers and acquisitions provide growth on two fronts. First, they allow companies the opportunity to enter new segments of their market they weren’t in before, which may increase their overall market strength. For example, private label superpremium pet food manufacturer C.J. Foods purchased ingredient supplier Lortscher Animal Nutrition in early 2018.
“The purchase of Lortscher Animal Nutrition increases C.J. Foods Holdings' investment share in the superpremium pet food manufacturing space at a time when our team and board are very bullish about the future of this market segment,” said Tod Morgan, C.J. Foods CEO at the time.
Second, companies can invest in and enter a new market for the first time, expanding overall market growth, such as when international private-equity firm Civen acquired European pet food manufacturer Partner in Pet Food (PPF) in April 2018.
“The European pet food market is one of the most attractive spaces in the wider consumer sector,” said Matteo Corà, senior principal at Cinven, at the time. “PPF is a highly successful business with further opportunities for growth organically, leveraging its production capabilities and track record for product innovation, and through acquisition.”