Top M&A deals of 2017 included hospitals, hot-dog-flavored potato chips

Don Mowery, top left, sold his Cumberland County construction firm R.S. Mowery & Sons to David Cross, top right, in July. The acquisition was one of several midstate sales to make headlines in 2017.

Hospitals, pharmacy chains, a construction company and an automotive parts manufacturer all found themselves planning for new ownership in 2017. So did a maker of hot-dog-flavored potato chips.

These deals were some of the dozens to take place in Central Pennsylvania in 2017. Although mergers and acquisitions dipped slightly over the past year, both locally and nationally, many business owners are still taking advantage of the growing economy as they try to entice buyers to open their wallets.

M&A activity will only increase over the coming years, some experts say, as a growing number of baby boomers eye retirement.

Below are some of the top mergers, acquisitions and affiliations to make headlines in the midstate this year, as ranked by number of views on the Central Penn Business Journal’s website.

Note: These rankings were compiled before two big end-of-year deals were announced: Hershey’s planned acquisition of the maker of SkinnyPop and Campbell Soup’s planned purchase of Snyder’s-Lance.

5. Rite Aid sells stores to Walgreens

After two years of will-they-won’t-they speculation, Rite Aid and Walgreens finally tied the knot – sort of.

The courtship started in 2015 when Walgreens Boots Alliance, the nation’s largest pharmacy chain, proposed a $9-per-share takeover of Cumberland County-based Rite Aid Corp. The deal hit delays, however, as the two companies fought through antitrust concerns with the Federal Trade Commission.

In the end, their merger ended up being less of a marriage and more of an open relationship. Walgreens dropped its takeover bid in June of this year and instead agreed to buy close to 2,000 of Rite Aid’s roughly 4,600 stores in a $4.4 billion deal.

Walgreens took over its first 97 Rite Aid stores at the end of November. The companies plan to wrap up the rest of the transitions – mostly involving Rite Aid locations in the southeastern U.S. – by the end of 2018.

Rite Aid, meanwhile, might already be on the lookout for someone to take over its remaining stores, some analysts are speculating.

4. Construction firm Mowery sold to first non-family owner

R.S. Mowery & Sons Inc. operated under the leadership of someone from the Mowery family for more than 90 years. That changed in July, when third-generation owner Don Mowery sold the Silver Spring Township construction business to David Cross.

Cross joined Mowery as president in 2015. A York resident, his resume includes leadership positions at Rock Commercial Real Estate LLC and Wagman Construction Inc. He is working alongside Don Mowery, who still works for the family business in a consulting, client relations and business development role.

Mowery and Cross did not disclose the financial terms of the acquisition.

The leadership transition comes at a time of booming construction activity. Some company owners, like Mowery, have viewed this surge as an opportunity to sell to eager buyers.

3. Hanover manufacturer bought by Belgian company

Belgian company Wabco Holdings Inc. wrapped up a $145 million purchase of R.H. Sheppard Co. in September, marking a major change in one of York County’s most prominent manufacturing plants.

Both Wabco and R.H. Sheppard specialize in parts sold to the automotive industry. Wabco pursued Sheppard in order to take on its line of power-steering gears, which Wabco officials said “set the industry standard for heavy-duty commercial and specialty vehicles.”

R.H. Sheppard had 900 employees at the time of the acquisition, split between company headquarters in Hanover and another facility in Virginia. Wabco has about 13,000 employees in plants throughout 40 countries.

The Sheppard family’s legacy has been entwined with the history of Hanover for much of the past century. The company was founded in 1937 by Richard Harper Sheppard, the son of Hanover Shoe Co. co-founder Harper Donaldson Sheppard. To this day, the Sheppard name remains on a local dam as well as a mansion owned by H.D. Sheppard’s great-granddaughters. 

2. Utz to buy owner of Nathan’s Famous, TGI Friday’s snack brands

Utz won’t be adding hot dogs or potato skins to its line-up of crunchy snacks, but it will soon have products inspired by them.

Hanover-based Utz Quality Foods announced plans in October to buy Inventure Foods Inc., the owner of Nathan’s Famous and TGI Friday’s snack brands, as well as Boulder Canyon Foods, Vidalia Brands, Poore Brothers, Tato Skins and Bob’s Texas Style.

The planned $165 million purchase gives Utz an opportunity to not only add a new line of products but also expand its geographic footprint to include Inventure’s manufacturing facilities in Indiana and Arizona.

The companies hope to close the deal by the end of 2017.

1. PinnacleHealth joins UPMC

When the University of Pittsburgh Medical Center signed off on plans to affiliate with PinnaceleHealth in March, it sparked one of the largest shake-ups of the midstate’s health care scene in recent history.

Dauphin County-based PinnacleHealth – now UPMC Pinnacle – was growing as UPMC started the affiliation process. On the same day that Pinnacle officials announced plans for the partnership, they also told the public that they intended the bring on four additional local hospitals into their fold.

UPMC Pinnacle now operates eight hospitals in Dauphin, Cumberland, York and Lancaster counties, as well as numerous outpatient campuses. UPMC plans to invest $1.5 billion in these facilities.

The UPMC/Pinnacle affiliation, which closed in September, comes as a time when hospital systems throughout the country are joining forces in order to cut costs and bolster bargaining power with insurers and employers.

Jennifer Wentz
Jennifer Wentz covers Lancaster County, York County, financial services, taxation and legal services. Have a tip or question for her? Email her at jwentz@cpbj.com.

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