According to PwC’s US retail and consumer M&A insights 2012 Year in Review and 2013 Outlook report released recently, U.S. retail and consumer merger & acquisition (M&A) activity in 2012 was primarily driven by corporations spinning off businesses, private equity (PE) investment in retail, increased cross border activity and expansion into e-commerce.
According to PwC, there were a total of 130 deals in the retail and consumer sector with values greater than $50 million in all of 2012, representing $91.2 billion, a 20 percent increase in volume and doubling the value seen in 2011. During the fourth quarter of 2012, deal volume and value increased 21 percent and 100 percent, respectively, to 41 deals at a total value of $26.2 billion, from the fourth quarter of 2011, which PwC attributes to sellers pushing to close deals before year end.
Cross border deal activity has remained consistent with prior year levels, representing 40 percent of deal volume and 50 percent of deal value in 2012. Asia was a leading area for U.S. investment abroad as U.S. companies continue to seek out opportunities to take advantage of the expected growth in consumer spending across the Asian economies. Internationally, PwC anticipates R&C companies to continue to invest in emerging markets, with China and Brazil being a focal point as their middle class continues to expand and their consumer economy grows.
The report states that the retail and consumer sector continues to be largely driven by food and beverage transactions both in terms of deal volume and deal value. While the number of food and beverage deals decreased from 2011, total transaction value returned to historical levels seen in 2009 and 2010 from a five-year low of $7 billion in 2011 to $36 billion in 2012 – a 414 percent increase.