As demand for organic and natural food continues to increase,
food industry leaders look for new ways to attract health conscious
consumers. The past few years have seen a pattern of food industry
giants acquiring natural and organic food manufacturers to appeal
to a growing demographic of consumers looking for healthy
alternatives to traditional food staples. Since January 2014, the
food industry has seen M&A activity totalling over $300 billion in value globally, with a large
section involving natural food manufacturers. The most recent deal
is Danone's $10.4 billion takeover of WhiteWave
Foods Co, manufacturer of soy and almond beverages. The
acquisition comes at a time when almond and soy milk sales are
growing rapidly, with sales over $700 million a year in North
America, as consumers switch from traditional milk products to
lactose free and low calorie alternatives.
Falling sales of food staples may also be a driving force behind
the recent string of acquisitions. In recent estimates, cereal sales dropped 5% from 2009 to 2014 and
soda consumption has hit a 30-year low. Facing
stagnating and falling sales in key products, food industry leaders
began to expand their natural and organic offerings, as well as
look for strategic M&A opportunities. This strategy appears to
be paying off. Hormel Foods Corp. recently posted a 20% increase in profits following its
acquisition of Applegate Farms LLC, a manufacturer of organic meat
products. While this trend shows no signs of slowing down, it
remains to be seen whether consumers of natural and organic brands
will embrace the acquisitions by established food manufactures or
if they will simply switch to the next up-and-coming natural food
The author would like to thank Olga Lenova, Summer Student,
for her assistance in preparing this legal update.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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