Active pet food M&A market continues in 2021

Not even a pandemic could slow pet food mergers and acquisitions in 2020. Deals have continued at a strong pace in 2021, indicating the market’s strength.

Pet food mergers and acquisitions have continued at a strong pace. | mucahiddin | iStock.com
Pet food mergers and acquisitions have continued at a strong pace. | mucahiddin | iStock.com

Changes to the annual Top Pet Food Companies ranking often arise from mergers and acquisitions (M&A), and this year’s list is no exception. In fact, if M&A is a reliable indicator of an industry’s strength, then recent activity signifies a robust pet food market.

Even with a once-in-a-lifetime pandemic and the ensuing financial and logistical upheaval, 2020 saw more than 31 pet food deals among manufacturers or marketers, suppliers and pet retailers. That level of activity has continued into 2021, which was just a few days old when three pet food-related acquisitions were announced. In total, from the beginning of 2021 to press date for this issue in mid May, 15 M&As had occurred.

Ongoing integration of pet food supply chain

With the pandemic sending e-commerce into hyperdrive in 2020—which has continued unabated—it’s no surprise that some of the deals in 2020 and 2021 have involved online pet retailers or direct-to-consumer (DTC) subscription services for pet owners. For example, on Jan. 4, 2021, Manna Pro announced its acquisition of Bullymake, a DTC dog treat service.

Yet much of the recent pet food M&A activity also echoes trends in play for several years now: a mix of big names, whether companies or brands, as well as smaller players; strong activity in the supplier and retail sectors, in addition to the manufacturing/marketing side; and, perhaps most striking, a blending of such sectors that integrates the supply chain of the parent companies to some extent.

Smaller players growing thanks to M&A

At this point in 2020, Bryan Jaffe, managing director of investment bank Cascadia Capital, predicted that any further pet food deals in the year would likely involve smaller targets and valuations, mostly by private equity (PE). While he was right about PE participation, including into 2021, some deals did involve bigger names. For example, in December 2020, J.M. Smucker (third largest pet food company globally) announced it was selling Natural Balance to a PE firm.

Also, some smaller pet food players are growing larger thanks to recent acquisition sprees. This includes Dane’s Capital Creek, United Pet Food, Partner in Pet Food and Manna Pro (which was itself acquired in November 2020).

All of this M&A activity is in addition to robust pet food company and supplier investments in new facilities or plant expansions—16 to date in 2021 alone—again pointing to the strength of the market.

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