Tag Archives: Acquisition

Intertek acquires Alchemy

Intertek to Acquire Alchemy

By Food Safety Tech Staff
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Intertek acquires Alchemy

Today Intertek Group plc announced its intent to acquire Alchemy Investment Holdings, Inc. (more commonly known as Alchemy). The company points to Alchemy’s People Assurance solutions for the food industry as playing a role in promoting operational excellence and helping to identify critical skill gaps in frontline employees, especially as supply chains and distribution channels increase in complexity. Intertek provides assurance solutions that help companies identify and mitigate risk in operations, supply and distribution chains, and quality management systems. The company believes the addition of Alchemy will strengthen its global offerings.

“Alchemy’s unique focus on frontline workforce training is critical for safety and operational execution. Our combined solution will provide companies with a higher level of quality assurance and with greater peace of mind.” – André Lacroix, Intertek Group

Alchemy is owned by The Riverside Company, a private equity company, and will be bought for a cash consideration of $480 million on a cash-free and debt-free basis, according to Intertek. The company intends to maintain its current focus and its management team will stay. “Alchemy does not plan to change its brand, its focus on frontline workers or the food industry, or to scale down its operations — to the contrary, this purchase only fuels more growth,” an Alchemy spokesperson stated in an email to Food Safety Tech. “Intertek’s client list and market access will give Alchemy additional global reach.”

US Foods

$1.8 Billion Cash Deal: US Foods to Acquire SGA’s Food Group of Companies

By Food Safety Tech Staff
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US Foods

This week US Foods Holding Corp announced a deal to acquire the five operating companies, SGA’s Food Group of Companies, for $1.8 billion in cash. SGA’s food companies are Food Services of America, Inc., Systems Services of America, Inc., Amerifresh, Inc., Ameristar Meats, Inc., and GAMPAC Express, Inc. Collectively these companies provide services that include food service for casual and fast casual dining, distribution, produce sourcing and marketing, custom meats, and supply chain planning and logistics.

“This acquisition will significantly increase US Foods’ reach across key markets in the attractive and growing Northwest region of the U.S. and adds one of the most well-regarded regional distributors to our company,” said US Foods Chairman and CEO Pietro Satriano in a company release.

In addition to expanding US Foods’ footprint in the Northwest, the company will leverage the scale of SGA’s Food Group of Companies, which have nearly 33,000 customers, 12 distribution centers and more than 20 private brands. US Foods estimates it will achieve $55 million in annual run-rate cost synergies by the end of FY 2022 as a result of savings in administrative expenses, distribution and procurement.

Matrix Sciences

Matrix Sciences Acquires Neumann Risk Services

Matrix Sciences

Matrix Sciences recently announced the acquisition of Neumann Risk Services, LLC (NRS), led by Melanie Neumann, J.D., M.S., according to a press release. Neumann’s venture, NRS, combines a consulting business with a legal practice, focusing in the areas of food safety, food science, food defense, recall & crisis management.

Adding NRS to the Matrix Sciences portfolio allows them to further grow their consulting capabilities, working with Neumann to expand their set of services. She will be building a suite of services targeted at helping companies reap the benefits of their investments in food safety risk management, according to the press release.

In addition to taking the role of Executive Vice President and General Counsel for Matrix, Melanie Neumann will also maintain Neumann Legal Services, a separate but allied legal practice. “I made the decision to join Matrix Sciences because our vision for meeting the changing and unmet needs of the food industry align very well,” says Neumann. “But more than that, our value in how we need to meet those needs make for a great fit.”

Neumann received her law degree from Mitchell Hamline Law School and a Master of Science in Food Science from Michigan State University. Neumann has worked as an attorney in a number of capacities at major food companies throughout the world, building herself a reputation as a prominent consultant, thought leader and adviser in the world of food safety.

Robert Wiebe, chief executive officer of Matrix Sciences, says this acquisition is an important step in their growth strategy. “Melanie and NRS are critical to building a true full-service solution provider,” says Wiebe. “Building on the capabilities and capacity from our acquisitions of Richter International and Northland Laboratories, our portfolio of companies represents a growing and unique partner for our customers in addressing the challenges and opportunities in bringing safe food to market.”

Heather Madland, Huron Capital

Accelerating Growth Through Acquisition

By Heather Madland
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Heather Madland, Huron Capital

Developing a plan for meaningful growth can be a challenge many business owners face. With Gross Domestic Product growth currently at three percent, if you aren’t launching new products or services, adding new customers, or increasing sales to existing customers, the road to continued growth may not be clear. However, a careful and strategic purchase of a company – an acquisition – is one approach that could help you in meeting your company’s growth goals in less time with potentially less uncertainty than relying on only organic growth to get you there.

The advantages of acquisition

While acquisition may come at a significantly higher cost than certain organic growth initiatives like expanding your manufacturing facility or solidifying a new customer relationship, it’s potentially faster to execute. Of course, no substantial business move is without its risk, acquisitions included, but an effective acquisition strategy can be worth considering particularly for a small or middle market company looking to accelerate revenue and earnings. Advantages may include:

  • Access to new markets both regionally and globally
  • A new, built-in customer base
  • An established product line
  • A larger pool of talent
  • New technology and physical assets

Through acquisition, your company may be able to remain a step ahead in existing markets while plotting expansion into new cities, states, regions or even countries. An acquisition strategy has the potential to expand your geographic reach and may even help improve or expand market share.

Other advantages may include expanding your existing customer and/or product base, while potentially introducing new products or customers. Absorbing existing customer relationships of the acquired company may reduce costs in one area of the business while allowing you to re-allocate costs and resources to other things like technology and talent.

Increasing your pool of qualified and experienced employees can be invaluable. Resources earmarked for training could possibly be allocated elsewhere. Meanwhile, diversification of talent may improve the performance of your existing workforce by leveraging best practices across the combined employee base.

Increase your profit margins

Acquisition has the potential to increase revenue and earnings if the right strategies and tactics are implemented. However, the devil is in the details, and it’s important to make sure you have a solid execution and integration plan in place. Assuming that’s the case, there are a few key reasons why earnings might grow after an acquisition, including:

  • Overhead optimization
  • More efficient use of assets
  • Improved purchasing power and economies of scale

Sales, marketing and administration can be some of the largest expenses companies bear. By eliminating redundant operating and administrative functions, you may be able to accelerate margin improvement post acquisition. The challenge comes in identifying where redundancies exist while making sure to retain critical institutional knowledge and relationships.

Asset efficiency or asset turnover means generating more revenue per dollar of assets. Improvements come from consolidating manufacturing and distribution locations, leveraging better manufacturing practices of the target, or automating inventory and ordering systems. With greater asset efficiency, you may be able to free up more working capital to invest elsewhere in the business.

You may also benefit from improved purchasing power and economies of scale. Whether it’s in office supplies or industrial equipment, larger companies with more purchases often benefit from greater spending volumes which can lead to discounted or lower cost purchases from vendors.

Where does the capital come from?

Sources of capital to support an acquisition are plenty and varied, though each comes with a unique set of pluses and minuses. One of the most common and well-known sources of capital is bank debt, which many companies use as “standard practice.” It’s generally the cheapest form of capital, though requires regular interest and principal payments that will impact your cash flow. However, seller financing and third-party equity investment are both potential alternatives.

Seller financing is a good option for business owners who lack the cash to pay for an acquisition and who may not qualify for traditional bank debt. In these situations, the seller acts as a lender, with similar terms to a bank, though securing this type of financing is generally faster than through a bank. A business owner should be aware, however, that when sellers offer this option, they are usually looking for a buyer with experience in the industry, a well thought out acquisition strategy and a solid business plan.

An equity investor, such as a private equity firm, specializes in buying a company or share of a company with the intention of selling at a later time. While there are typically no required cash interest or principal payments associated with equity financing, depending on the arrangement and terms negotiated, an equity investor may end up with either a majority or minority ownership stake. However, there may be more to what equity partners can offer beyond just a check, including certain operational, strategic and financial resources to help your company grow. For example, an equity partner with other investments in a similar industry as yours may be able to help you expand existing customer relationships and/or introduce you to new ones. An equity firm may also be able to help you build a formal sales team and business development process, train new managers and find and execute the acquisition you are contemplating.

Overall, it may be possible to accelerate growth through acquisition; and a thoughtfully considered and carefully executed acquisition strategy certainly has its advantages. While the expense of doing an acquisition can be a factor, there are a variety of worthwhile capital options to help you get your deal done. Besides, if you can meet your financial goals in less time through acquisition than you otherwise would by pursuing an organic growth strategy only, it’s certainly worth assessing the feasibility of such a strategy for your own business.

3M Acquires Elution Technologies in Expansion of Allergen Detection Services

3M has acquired the company Elution Technologies as of September 7, 2017. The acquisition enables 3M to add a new product to its portfolio that enables food and beverage companies to test for allergens such as peanuts, milk or soy.

“Elution Technologies’ test kits offer proven technology with an easy-to-use design that delivers fast and accurate results for companies offering peanut-free, gluten-free and other specialized foods for people with certain sensitivities and allergies,” said Polly Foss, general manager, 3M Food Safety. “We are pleased to add this technology to our broader food safety offering, and extend these important solutions to food processing companies across the globe.”

Testing for allergens has become increasingly important in the food industry. To find out more about this acquisition, please visit the 3M website.

Campbell Soup Company

In Move to Expand into Organic Food, Campbell’s Buys Pacific Foods

By Food Safety Tech Staff
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Campbell Soup Company

As consumer preferences continue the shift toward organic food, Campbell Soup Co. announced its $700 million acquisition of Pacific Foods today. The cash deal will help Campbell Soup expand into the organic and functional food spaces, according to company president and CEO Denise Morrison.

Pacific Foods is an excellent fit with Campbell — strategically, culturally and philosophically,” said Morrison in a company press release. “It advances our strategic imperatives around real food, transparency, sustainability and health and well-being. Culturally, Campbell and Pacific Foods share similar values and a commitment to a purpose-driven approach. Philosophically, both companies believe in making food that we are proud to serve at our own tables using simple, recognizable ingredients.”

Pacific Foods produces organic broth and soup, as well as shelf-stable plant-based beverages and other meals. The Oregon-based company, which employees 540 people, will become part of Campbell’s Americas Simple Meals and Beverages division. Pacific Foods CEO and co-founder Chuck Eggert will remain a supplier of key ingredients through his family farms, which will help the company continue its farm-to-table philosophy. “We’ve spent the past 30 years focused on making nourishing foods with an emphasis on simple, organic ingredients and authentic, rich flavors,” said Eggert. “Looking ahead, a future with Campbell means we can maintain what we value while accelerating growth of the brand in a way that we couldn’t do alone, reaching more people while increasing our impact on sustainable agriculture.”