PwC: Retail and consumer mega deals hits seven year high in Q3
New York --Retail and consumer merger and acquisition activity in the United States during the third quarter of 2014 was driven by the highest volume of mega deals (deals with a value of over $1 billion) in at least seven years, leading to overall transaction value jumping significantly during the quarter when compared to the year ago period, according to PwC’s U.S. retail and consumer deals insights Q3 2014 report.
There were a total of 11 mega deals worth $88.1 billion during Q3 2014, more than double the number of mega deals last year--which saw five mega deals--and a 516% increase in deal value from $14.3 billion during the year ago period.
For the three month period ending Sept. 30, 2014, there were a total of 47 deals in the retail and consumer sector with disclosed values greater than $50 million, a slight decrease from the 45 deals in Q3 2013. However, total deal value for the most recent quarter (for deals greater than $50 million) was up 254% to $97.7 billion compared to Q3 2013, which had a total deal value of $27.6 billion.
Sequentially, deal volume (for deals greater than $50 million) was down from 53 deals during Q2 2014, although deal value increased from $37.9 billion.
“The retail and consumer sector experienced another strong quarter for deal activity, which was primarily dominated by the food and beverage subsectors,” said Leanne Sardiga, PwC’s U.S. retail & consumer deals leader. “While deals in these sub-sectors are experiencing sustained private equity participation, overall deal activity is being driven by corporates, which made up 77% of deal volume during the third quarter. Given a continued board room focus on executing a strong growth agenda in today’s evolving and challenging consumer environment, along with ample financing availability and cross border interest, factors remain positive for R&C sector M&A activity in closing out the year.”
Cross border activity increased during the third quarter of 2014, representing 49% of total deal volume compared to 38% in the second quarter. Year-to-date cross border deal activity continues to be more prevalent in 2014. This trend is expected to continue in 2014, according to the report, as retail and consumer companies look to expand into faster-growing international markets to bolster stagnant growth in their home market and drive growth from an expanding consumer-oriented middle class in emerging economies, while strong U.S. brands and a large consumer market continues to attract inbound investment.