---
title: "Reviewing the Top 10 Mergers and Acquisitions in the Food Sector in the First Half of the Year, Resonating with the Overall Economic Trends"
description: "Believers in economic cycle theory hold that economic booms and busts follow their own patterns, with major trends governing everything. Following a series of tech mergers and acquisitions in 2015 and 2016 (such as Didi and Uber China, 58.com and Ganji), the food sector has also seen a wave of M&A this year. Online sources have summarized ten major deals, reflecting various intentions: some old forces are trying to acquire fresh blood to sustain themselves, some oligarchs are reducing transaction costs through M&A, some are seeking to expand internationally, and others are looking for new growth areas."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-05-14"
categories: "Capital, Earnings & M&A, Industry Trends"
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citation: "New Distribution. “Reviewing the Top 10 Mergers and Acquisitions in the Food Sector in the First Half of the Year, Resonating with the Overall Economic Trends.” New Distribution, 2017-05-14. https://xinjignxiao.com/en/articles/reviewing-the-top-10-mergers-and-acquisitions-in-the-food-sector-in-the-e23ef6bf/"
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# Reviewing the Top 10 Mergers and Acquisitions in the Food Sector in the First Half of the Year, Resonating with the Overall Economic Trends

> Believers in economic cycle theory hold that economic booms and busts follow their own patterns, with major trends governing everything. Following a series of tech mergers and acquisitions in 2015 and 2016 (such as Didi and Uber China, 58.com and Ganji), the food sector has also seen a wave of M&A this year. Online sources have summarized ten major deals, reflecting various intentions: some old forces are trying to acquire fresh blood to sustain themselves, some oligarchs are reducing transaction costs through M&A, some are seeking to expand internationally, and others are looking for new growth areas.

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Believers in economic cycle theory hold that economic booms and busts follow their own patterns, with major trends governing everything. Following a series of tech mergers and acquisitions in 2015 and 2016 (such as Didi and Uber China, 58.com and Ganji), the food sector has also seen a wave of M&A this year.
Online sources have summarized ten major deals, reflecting various intentions: some old forces are trying to acquire fresh blood to sustain themselves, some oligarchs are reducing transaction costs through M&A, some are seeking to expand internationally, and others are looking for new growth areas.
In short, the past three years have been a period of 'transition' in the 'beginning, development, transition, and conclusion' cycle. 'Transition' means that previous momentum has been exhausted, and a new situation is needed.
In the first five months of 2017, the food sector saw 10 M&A deals. Dairy giants Yili and Mengniu, beverage companies Master Kong and Danone, and food giants like Kraft Heinz have all launched a series of M&A actions, with funds ranging from hundreds of millions to tens of billions.
**1. Yili acquires foreign organic yogurt producer for $850 million**
On May 10, Yili announced that it would acquire all shares of Stonyfield for a total of $850 million.
Stonyfield is an organic yogurt producer under Danone and is currently the world's largest organic yogurt producer. The company owns several popular local yogurt brands in the U.S., including YoBaby, YoToDDler, YoKids, and OiKOs, with a rich product line covering whole milk Greek yogurt, fat-free yogurt, children's yogurt, and other categories.
On March 31, 2017, Danone announced it would sell its stake in the company to avoid antitrust claims. Stonyfield's 2016 revenue was approximately $370 million, with net profit of $50 million. Stonyfield holds a leading position in the U.S. organic dairy category and has performed well, so acquiring it provides Yili with an additional growth channel. In addition to enriching its product line, learning from and borrowing foreign organic low-temperature product technology will be another gain for Yili in the future.
**2. Mengniu President Lu Minfang increases stake in Modern Farming to 57.9%**
On February 3, Mengniu held a special shareholders' meeting in Hong Kong to vote on the proposal to fully acquire Modern Farming, China's largest raw milk producer. This is also the first acquisition by Mengniu's new president, Lu Minfang, and has attracted particular industry attention.
According to the latest joint announcement by Mengniu and Modern Farming, as of March 7, Mengniu had acquired an additional 20.1% of Modern Farming through a tender offer. Combined with the previous 37.8% on a fully diluted basis, Mengniu now holds a total of 57.9% of Modern Farming.
Since Lu Minfang took office as president of Mengniu, the full acquisition of Modern Farming and the formulation of a new strategy around Modern Farming's high-quality milk sources mark the beginning of Lu Minfang leading Mengniu towards its 2020 goal of 100 billion yuan. After the tender offer is completed, Mengniu will maintain Modern Farming's listing status. In fact, Mengniu does not want Modern Farming to delist; it will keep it independently listed to facilitate easier financing in the capital market.
Mengniu's full acquisition of Modern Farming, leveraging large-scale pasture farming to develop low-temperature dairy products, is a new strategy different from the past. It requires courage and boldness; if implemented well, it will quickly achieve a curve overtaking. This is a consumption trend and the best path to integrate Mengniu's upstream and downstream resources.
**3. Wahaha seeks to acquire U.S. dairy company to prevent performance decline**
On May 9, Zong Qinghou, chairman of Wahaha Group, which is focusing on acquiring foreign large companies, said the company is in talks with U.S. dairy company Dean Foods, but did not disclose details. Dean Foods is the largest producer and supplier of liquid milk in the U.S., with product lines including regular milk, flavored milk, ice cream, fermented dairy products, and dairy beverages, and owns more than 50 local or regional brands. According to the 2016 global dairy top 20 list released by Rabobank, Dean Foods ranks tenth, while Chinese dairy company Yili ranks eighth. Currently, Dean Foods has almost no business in China.
Some analysts say that over the next five years, more than 40% of global dairy market growth will come from China. After Wahaha's split with Danone, its dairy products have lacked highlights. If the acquisition can help Dean Foods gain a foothold in China, it would create a win-win situation.
**4. Zong Fuli buys China Candy, seen as a backdoor listing attempt**
On March 31, China Candy announced that major shareholders Jiaqing and Noble Core had signed a letter of intent with potential buyer Ms. Zong Fuli (only daughter of Wahaha chairman Zong Qinghou). Zong Fuli intends to acquire a total of 26.01% of the company's shares and may make a voluntary offer to acquire no less than 50% of the voting rights. Wahaha is China's largest food and beverage producer, and its business has never been listed on the stock market. This purchase of a shell by Zong Fuli is seen by many market observers as the first step towards Wahaha's listing.
Zong Fuli has long been educated abroad. Unlike her father's family-style management, her management thinking tends to be more professional and institutionalized. The backdoor listing of her subsidiary indicates that she is more open to introducing external capital. This may also mean that Wahaha, the famous Chinese beverage and food giant, has begun the path of power transition.
**5. Master Kong acquires Ovaltine to enter the ready-to-drink milk market**
This year, Master Kong signed an agreement with Shanghai ABF Food & Beverage Co., Ltd. (Associated British Foods): starting from May 1, 2017, Master Kong Beverages is authorized to exclusively produce and sell ABF's Ovaltine malt nutritional ready-to-drink milk products (excluding powdered drinks) in mainland China.
Master Kong stated that Ovaltine, as a world-renowned brand, has been fully recognized by Chinese consumers for its health, deliciousness, and nutrition since its entry into the Chinese market. As a leading company in the food and beverage industry, Master Kong has outstanding advantages in product development, channel refinement, and marketing management. In addition, with the relaxation of the 'two-child policy', it is predicted that the ready-to-drink milk market still has significant room for growth.
**6. Saikexing acquires two companies for 600 million yuan to promote integration**
On March 1, Saikexing announced that it plans to acquire 100% equity of Xinghua Company and Haihua Company through issuing shares and paying cash. The 100% equity of Xinghua Company is valued at 199 million yuan, and the 100% equity of Haihua Company is valued at 408 million yuan, totaling 607 million yuan.
The main businesses of Xinghua and Haihua both involve dairy farming. The company stated that it will integrate the resources of the acquisition targets to achieve complementary advantages and enhance overall competitiveness. Saikexing's main business is the production and sale of sexed frozen semen for dairy cattle and other livestock, improved dairy cow female calves, and high-quality raw milk.
**7. New Hope acquires Jinfuhou to enter the condiment market**
On March 18, New Hope announced a strategic cooperation with Jinfuhou, and immediately launched 'Youyan Youwei' hot pot base as the first product of the cooperation, marking New Hope's first formal entry into the condiment industry. According to the cooperation plan, the two parties will integrate Jinfuhou's own advantages through the injection of New Hope's brand, team, and R&D, to create branded, high-end, and healthy condiment products. New Hope plans to use hot pot base as an entry point, and in the future hopes to launch fish seasoning and other condiment products, and will achieve layout through mergers, acquisitions, and restructuring.
Sichuan New Hope Condiment Co., Ltd. is the company under New Hope specifically responsible for condiment operations. Its team was established on April 11, 2016, and it belongs to the second-level business division of New Hope Group's Caogen Zhiben Group. In contrast, Jinfuhou is a veteran in Sichuan's local condiment industry. Founded in 2004 with registered capital of 37.5 million yuan, it is a food enterprise integrating vegetable cultivation, R&D, production, and sales.
Zhou Xianzhong, chairman of New Hope Condiments, stated that Sichuan cuisine is one of the most widely accepted and favorite cuisines among the eight major Chinese cuisines. New Hope Condiments will focus on the development and operation of Sichuan-style condiments such as Pixian bean paste, Sichuan pickles, hot pot base, and compound seasonings. According to the plan, with the establishment of the New Hope Condiment ecosystem, the company plans to grow its condiment business to 2 billion yuan in five years.
**8. Juewei Food acquires to enter specialty food and light dining**
On May 8, Juewei Food (603517), which had been listed for less than two months, held its 2016 annual shareholders' meeting. Chairman Dai Wenjun stated that the industry is still in a small and scattered stage with low concentration, 'The top 10 companies in the industry account for no more than 10% of the total market share.'
Therefore, Dai Wenjun believes that the urgent task for the leisure marinated products industry is not red ocean competition, but 'first to integrate small brands or even unbranded ones in the industry.' As one of the leading companies in the industry, Dai Wenjun said, 'The company will try to integrate the industry through investment and M&A.' It is reported that Juewei Food's M&A expansion direction will focus on specialty food and light dining areas closely related to its main business.
**9. Danone acquires U.S. WhiteWave**
On April 13, Danone announced that it had completed the acquisition of food company WhiteWave. Danone and WhiteWave will merge their existing North American businesses into a strategic business unit named 'DanoneWave'.
In July last year, Danone reached an agreement with U.S. dairy producer The WhiteWave Foods Company to acquire it at a valuation of approximately $10 billion. After nearly a year, Danone finally completed the acquisition, marking its largest acquisition in a decade.
WhiteWave was founded in the U.S. and focuses on natural and organic food businesses, including high-end organic dairy products, non-GMO foods, plant-based protein foods and beverages, fresh food, and coffee creamers. Among them, Silk is the best-selling soy milk brand in the U.S. Another plant-based beverage brand, Alpro, also has broad influence in European and American markets. In 2014, Mengniu and WhiteWave jointly created the plant-based drink brand Silk Zhimu Mofang and sold it in the Chinese market.
**10. Kraft Heinz's $143 billion acquisition of Unilever fails**
On January 17, Kraft Heinz proposed to acquire Unilever for $143 billion to create a global consumer goods giant. If the acquisition of the FMCG giant Unilever by U.S.-based Kraft Heinz had succeeded, it would have brought together many well-known brands such as Oreo, Maxwell House, Lipton, and Dove.
However, this ambitious acquisition plan ultimately fell through. Unilever unilaterally rejected the proposal on January 17, stating that the offer severely undervalued its worth and that the deal had no strategic or financial benefits, and there was no need for further discussion with Kraft Heinz.
**Source: Consumer Daily Exposure**


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- Published: 2017-05-14
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