Healthy Snack Food Sector M&A Transactions and Valuations

The report analyzes mergers and acquisitions in the healthy snack sector, covering valuation trends from Q1 2020 to Q3 2024, including EV/revenue and EV/EBITDA multiples, with average and median valuations for private deals and public companies. It highlights over $280 billion invested in 2,621 US-led transactions, showing a preference for M&A activity. Case studies on Dot’s Pretzels, KIND Snack, and Cibo Vita demonstrate strategic goals like market expansion, brand diversification, and growth potential, which supported post-transaction success. This report serves as a resource for advisors, entrepreneurs, and executives seeking to deepen their understanding of M&A transactions and valuations within the healthy snacks industry.

Valuations

This section analyzes valuation multiples for M&A transactions, highlighting key metrics like EV/revenue and EV/EBITDA that offer insights into market valuations. The findings reveal industry trends, including clustered valuations and high-value outliers.

• The valuation multiples are derived from a sample set of private and public M&A transactions within the healthy snack and related food sectors. The data was collected as of October 31, 2024.
• The graph shows that most transaction EV values are between $10 million and $100 million, with revenue and EBITDA valuation multiples from 1x to 10x. This variation reflects a diverse range of companies, from small enterprises to large industry leaders, indicating differing growth prospects and market positions that influence investor perceptions of value and potential.
• Two significant outliers stand out with extremely high enterprise values of approximately $36 billion and $9 billion, along with notably higher EV/EBITDA multiples of approximately 23x and 19x, respectively. These outliers skew the overall range and suggest that these companies likely hold dominant market positions or possess unique assets that drive higher valuations compared to the rest of the sample.

Capital Markets Activities

Capital market transaction activities for M&A deals within the healthy snack sector data is included between 2020 and 2024 in this report. The sample set includes acquisitions both within and outside the United States, and encompasses direct healthy snack transactions and related deals, providing a comprehensive view of this dynamic and broad market.

• From Q1 2020 to Q3 2024, firms invested over $287 billion in the healthy snacks and related sectors through 2,621 M&A deals, averaging approximately $110 million per transaction. Investment trends demonstrated volatility, peaking at over $47 billion in Q2 2021 and rising to $37 billion by Q3 2024, while maintaining an overall upward trend in deal count despite occasional declines, with substantial amounts allocated to select companies.
• The most significant deployment of capital was in Q3 2024: 12.5% of the total capital was represented by Mars’s $36 billion investment in the acquisition of Kellanova (NYSE: K), formerly known as the Kellogg Company, on August 20, 2024.
• The highest deal count was recorded in Q4 2021, with 204 transactions. Although the deal count has consistently increased, capital investment has remained stable from a trend line perspective; nonetheless, investments in the sector have continued throughout the period.

Next, J&A examined the dynamics of M&A transactions in the healthy snack food sector. Our analysis reveals that while the US is a leader in capital investment within this market, it constitutes just over one-third of the total deal count.

• The United States leads in the healthy snack food sector transactions, with $176 billion in capital invested across 1,090 deals, accounting for 61% of the total capital deployed and 42% of all deals within the period. This indicates that the US is the primary hub for M&A activity in the sector.
• Switzerland has captured 10% of total investments in the healthy food sector, driven by a dedication to enhancing food security, sustainability, and innovation considering shifting consumer preferences and the global supply chain challenges intensified by the COVID-19 pandemic.
• Overall, the United States leads in capital investment volume within the industry, with various allocations occurring internationally, highlighting opportunities for market expansion.

J&A analyzes the distribution of transactions by deal type, highlighting that most of the capital was allocated to M&A control transactions, followed closely by growth-oriented leveraged buyouts.

• The M&A category shows the largest capital investment, totaling $224 billion, and the highest deal count with over 1,583 transactions, highlighting strong financial commitment and the popularity of acquisitions in the healthy snack food sector, likely driven by growth opportunities and market share expansion.
• Buyouts and LBOs rank as the second most preferred deal type among investors throughout this period, attracting over $63 billion across 1,038 transactions. This demonstrates their appeal for high returns through strategic control and operational improvements.
• The prevalence of buyouts and M&A deals signals strong market confidence and a strategic shift among companies towards aggressive growth as they seek to consolidate resources, achieve economies of scale, diversify operations, and access new markets in response to evolving market conditions.

M&A Transactions Case Studies

Included here are three transaction cases that highlight the key intangible assets that influenced the acquisition rationale and the associated valuation multiples.

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Transaction Structure

KIND was acquired by Mars for $5 billion in a strategic move after three years of holding a minority stake in the company. In 2020, KIND reported $1.6 billion in revenue, which implies an enterprise value-to-revenue multiple of 3.13x.

Market and Customer Segments Combination

KIND and Mars overlap in the health-conscious snack segment, targeting consumers focused on nutrition and convenience. Both brands appeal to younger demographics that prioritize quality ingredients and sustainable practices.

Acquisition Business Case

Mars acquired KIND to strategically expand its health and wellness portfolio, capitalizing on the growing consumer demand for nutritious snack options. The acquisition enables Mars to diversify its offerings, enhance its presence in the healthy snack market, and leverage KIND’s established brand, intellectual property, and innovative products. Additionally, maintaining KIND’s unique identity as a separate entity within the Mars family helps sustain its brand appeal while benefiting from Mars’s resources and distribution capabilities. 

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Cibo Vita Inc. is a food producer and supplier based in Totowa, New Jersey. The company offers a variety of natural and organic products, including nuts, dried fruits, granola, trail mixes, pretzels, chocolate-covered nuts, and more, providing customers with healthy and organic food options.

Transaction Structure

In January 2024, Citation Capital acquired a majority stake in Cibo Vita for $480 million, with Natureza Growth Partners participating as a follow-on investor. The transaction was supported by debt financing, although details regarding the financing commitment have not been disclosed.

Market and Customer Segments Combination

Cibo Vita operates in the healthy food products manufacturing category, utilizing a multi-channel distribution strategy that includes partnerships with grocery chains, specialty health food stores, and online retailers. This approach allows the company to reach diverse customer segments, including health-conscious consumers, families, fitness enthusiasts, and e-commerce shoppers, all reflecting the rising demand for nutritious snacks.

Acquisition Business Case

Citation is the first external shareholder in Cibo Vita, while the co-founders, with their valuable expertise, retain a substantial ownership stake. Cibo Vita and Citation will work closely to accelerate the company’s growth, united by a mission to offer smart snacking choices for every household. Leveraging the founders’ expertise, Citation will partner closely with Cibo Vita to drive ongoing success and expansion. This transaction exemplifies how private equity firms increasingly focus on mid-sized, high-growth sectors that demonstrate significant potential for expansion.

In summary, the healthy snacks sector has seen a significant surge in mergers and acquisitions from Q1 2020 to Q3 2024, highlighting its growing appeal and potential. With over $280 billion invested across 2,621 transactions, this growth is largely driven by US activity. Valuation multiples indicate strong investor confidence, as reflected in high EV/EBITDA and EV/revenue ratios, showing that acquirers recognize both current value and future growth.

The case studies reveal motivations for these acquisitions, including market expansion, brand diversification, and the acquisition of key intangible assets. As demand for healthy snacks continues to rise, M&A activity is expected to remain strong, offering ongoing opportunities for investors.

Source: PR Newswire, MARS, Pitchbook Data.