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JAB Holding, Bacardi, Ferrero lead family-fuelled M&A spree
JAB Holding, Bacardi, Ferrero, and Molson Coors
have kickstarted a wave of family-controlled merger and acquisition (M&A) deals in early 2018 valued at more than $26 billion. Luxembourg-based JAB, which mainly controls the wealth of Germany’s Reimann family, is to buy the US soft drink maker Dr Pepper Snapple for $18.7 billion, and merge it with coffee pod producer Keurig Green Mountain, which JAB bought in 2015. JAB has spent more than $30 billion on café assets over the last five years, including Keurig, Caribou Coffee, Krispy Kreme Donuts, and Panera Bread. The combined company—Keurig Dr Pepper (KDP)—will have revenue of about $11 billion per year. Barclays’ equity analyst Lauren Lieberman emphasises “the long-term perspective of JAB stakeholders”, and said the deal was reminiscent of when the holding company merged Coty with P&G’s beauty business in 2015. “In both cases, we expect the grand plan to become clear over time as JAB is a group with a unique vision on
$26.6 bn
Value of family- backed M&A
deals in first six weeks of 2018
$18.7 bn Price offered by
JAB Holdings for US cold drinks company Dr
Pepper Snapple
$5.1 bn Bacardi family’s
proposed price for premium spirits maker Patrón
industry evolution and a preference for longer-term thinking.” Global deal-making has already surpassed $150 billion in 2018—levels not seen since the dotcom boom in 2000, according to Bloomberg. The Intralinks Deal Flow Predictor, a predictor of future M&A announcements, forecasts that the number of M&A deals in the first quarter of 2018 will be up 2%, with Asia-Pacific as high as 14% up on the first quarter of 2017. More than 50,000 M&A deals were announced worldwide in 2017, including the proposed landmark $66 billion sale of Rupert Murdoch’s 21st Century Fox’s entertainment businesses to Walt Disney. Family-owned Bacardi has joined in, buying premium brand Patrón for $5.1 billion. Bacardi already owned 30% of the tequila company, but is now its sole owner. Controlled by the seventh generation of the eponymous family, Bacardi has a 200-brand portfolio including Grey Goose, Dewar’s, Bombay Sapphire, Martini, and St-Germain. Meanwhile Italian confectionary giant Ferrero is set to become the third-largest player in the global chocolate market following its $2.8 billion proposed buy-out of Nestlé’s US confectionery business. The deal will make Ferrero the third-largest confectioner, behind fellow family business Mars, and Hershey’s, which bid against the Italian company in the battle for Nestlé. Led by executive chairman Giovanni Ferrero, founder Pietro Ferrero’s grandson, the luxury Italian chocolatier has gone on a US deal spree over the last year, buying Fannie May in March 2017 then Ferrera for $1.3 billion in October. By contrast, Giovanni Ferrero’s father Michele was with the family business for more than 50 years without carrying out any acquisitions. He was rumoured to quash a 2009 deal to buy Cadbury, which his sons had lined up. The $26.6 billion M&A deal total does not include family-to-family acquisition of 290-year-old UK cider maker Aspalls by brewing giant Molson Coors which was completed for an undisclosed sum in January.
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REQUESTED COMMENTS FROM: MCKINSEY, ACURIS (MERGERMARKET), RESPONSESOURCE PHOTOGRAPHY: IRINA MOS/SHUTTERSTOCK, PRESS ASSOCIATION, ESTELLE MAERSK
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