Canadian Lawyer InHouse

october 2014 38 INHOUSE I n d u s t r y S p o t l i g h t Experience Counts. Referrals respected and appreciated. Employment and Labour Lawyers Shields O'Donnell MacKillop LLP 416.304.6400 65 Queen Street W, Suite 1800, Toronto, Ontario Canada M5H 2M5 Shields_IH_Apr_11.indd 1 3/1/11 10:04:56 AM hEALThy FOOd, hEALThy PROFITS Protein isn't the only popular food these days. Healthy food is another growing area. "I think the biggest are natural and organic," Maharaj says. "People are looking for food that's better for them. . . . The key is to get ahead of the next curve. Ten years ago, it was low carb. Then it became low fat, then high fi bre." But people also want "local" — products that come from farms and manufacturing facilities close to home. Meanwhile, many mergers and acquisitions see Canadian companies acquired by businesses from oth- er countries. Grupo Bimbo, from Mexico, bought Canada Bread Co. from Maple Leaf Foods Inc. in May for $1.83 billion. Brazil's JBS S.A. bought meat packing company XL Foods Inc. in Edmonton in January 2013 for US $50 million. Do these global deals undermine the lo- cal credibility of the companies involved? "I don't think those trends are necessarily mu- tually exclusive," MacGowan says. "Owner- ship of a processor by, for instance, a Span- ish entity doesn't mean the product can't be sourced, marketed, and consumed locally." Specifi c to this country, Canada's de- preciated dollar is a problem for some businesses. The loonie is worth less than the U.S. dollar, and that depressed value negatively affects companies that rely on imported goods. "Canadian food retail- ers derive approximately 10 to 15 per cent of their revenues from produce, which is largely imported from the U.S. or coun- tries which export product priced in U.S. dollars," PwC said in its Capital Markets Flash. This increased cost is then passed on to the consumer, who typically chooses less expensive products over imported produce to save money. Regardless of the dollar problem, PwC expects the high M&A activity level to con- tinue. One potential risk is that stock mar- kets will dip, which would mean less investor money available to fund mergers and acqui- sitions. Given that the Dow Jones Industrial Average, the Toronto Stock Exchange and the Standard & Poor's 500 have been trad- ing at or near record highs lately, the risk of a slowdown is substantial, Valentine says. "Other than that, I think it will be a strong market," he says, "largely driven by the thesis that with rising middle class populations, the demand for and scarcity of food will continue to be a central concern that the world will grapple with. Compa- nies in the food and beverage sector will be highly sought after." IH competition bureaus around the world are looking at these mergers closely. that could prevent further large-scale acquisitions. AV MAHArAJ, Fasken Martineau DuMoulin LLP '' '' prevent further large-scale acquisitions. ''

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