The upturn in business sentiment following the global economic downturn looks like it could bring with ita wave of consolidation in the global food and drink sector. As home to some of the world’s mostimportant multinational firms the US looks like it will play a key part in this process, with two majordeals announced over the last three months.In September it was reported that JBS, the world’s largest beef processor, is set to launch a bid for thelargest poultry processor in the US, Pilgrim’s Pride. The company filed for Chapter 11 bankruptcyprotection in December 2008 after struggling to contend with high debts, low poultry demand and risingfeed costs and should therefore be available for an attractive price. JBS has been aggressively expandingin the US and despite political opposition managed to seal acquisition of the beef operations meat groupSmithfield Foods for US$560mn in October 2008. However, plans to acquire the country’s fourth largestbeef producer, National Beef Packing Company, foundered after the US department of Justice hadsought to block the deal on competition grounds.BMI also believes the sharp appreciation of the US dollar against the Brazilian real, along with thedeteriorating global economic situation may also have played a part in persuading JBS not to challengethis decision, with the currency movements making US assets much more expensive to Brazilian firms.However, with the global economic situation looking up and the real rallying against the dollar, the firmhas once again turned its attentions to the huge US market. Pilgrim’s Pride is the largest chicken producerin the US, accounting for around a quarter of the entire chicken market, and the acquisition would putJBS on a par with current market leader Tyson Foods in terms of overall scale in the meat sector.Another firm looking to take advantage of the depressed state of global equity prices is Kraft which inSeptember launched a GBP10.2bn (US$16bn) bid for UK-based confectionery producer Cadbury.Although Cadbury has so far rejected these advances a tie-up between the two businesses would makestrategic sense given the global scale and brand reach that a combined entity would afford. A combinedfirm would be a formidable force in the confectionery sector and offer enough scale to challenge themight of Mars Wrigley, which has assumed a leading position in the sector following the merger of Marsand Wrigley in 2008. However, the attractions of Cadbury have not gone unnoticed and there is growingspeculation that a rival could launch a counter bid. BMI believes the two most likely candidates areNestlé and Hershey. Nestlé is currently flush with money having disposed of part of its stake in eye carebusiness Alcon and would see Cadbury’s brands as an ideal fit for its own confectionery business. YetNestlé is unlikely to want to get into a bidding war and, as it is already the world’s largest food firm, maysee Cadbury’s assets as ‘nice to have’ rather than ‘must have’. Perhaps a more likely contender isHershey, which has failed to make any significant progress outside of the US market and may seeCadbury as its last chance to develop an international business.