Nomad Foods enters acquisition talks (NOMD)
On Monday, Nomad Foods announced that it has entered into exclusive negotiations through the end of March to acquire Fortenova Group’s frozen food division. The company owns the Ledo Plus, Ledo Citluk, and Frikom businesses. Fortenova Group is the successor to Agrokor, which went bankrupt in 2017 amid accusations of fraud by its founder and divested some non-core operations. Fortenova’s food companies generated about $1.4B in revenues, including ice cream, cooking oils, margarine, and mayonnaise.
The acquisition would add the markets of Croatia, Serbia, Bosnia, & Herzegovina, and several other countries in Southeastern Europe. The acquisition price was rumored to be as much as €600M. Norwegian food producer Orkla and a Czech-Slovak consortium of private equity were also doing due diligence on the business.
The Findus acquisition in 2015 was €700M, so the size is similar. Suppose the acquisition reaches an agreement, Nomad Foods would have both Findus Switzerland and Fortenova Frozen Food to add growth against the pandemic's comparisons in 2020. The multiple may be a little higher for Fortenova as it has a higher growth rate and was more negatively impacted by the drop in tourism in 2020. Nomad Foods has proven its acquisition price discipline and its ability to extract synergies.
Casual dining traffic trends slow (USFD)
Traffic to casual dining restaurants has slowed in November and even further in December, according to Placer.ai. The casual dining sector had been improving with to-go, limited indoor dining, and outdoor dining. With the colder weather and additional indoor dining restrictions, traffic trends have weakened in November, as seen in the following chart.
Several restaurant companies pre-announced weaker sales trends on Monday. The weaker sales trends for the industry were largely anticipated. Sales trends outperformed traffic trends with more delivery and to-go orders offsetting fewer outdoor and indoor dining, as seen in the chart from US Foods below. US Foods said markets with fewer restrictions are close to 2019 case volumes.
The improvement in US Foods’ volumes in the last week of December diverges from the traffic trends reported by Placer.ai and sales trends from Black Box. Management said the way Christmas fell during the week accounted for that improvement.
Alcohol sales soar in the grocery channel for New Year’s (ACI)
The week ended January 3, total CPG demand increased 13% in the grocery store channel, decelerating slightly from +15% in the previous week as seen in the following chart. Total edible sales decelerated to +12% from +20%. Edible demand was driven by a significant acceleration in beverage alcohol sales that accelerated to +40% due to New Year’s celebrations at home.
