PwC: Retail mergers & acquisition activity hits five-year high in 2014
New York -- U.S. retail and consumer (R&C) total transaction value for 2014 hit a five-year high and surpassed the $100 billion mark for the second year in a row, according to PwC’s U.S. retail and consumer deals insights 2014 Year in Review and 2015 Outlook report.
According to the report, transaction value for announced deals greater than $50 million was $195 billion, up 57% from $124 billion in 2013. This five-year high was due largely to the extremely active third quarter in 2014, which included several significant multibillion dollar transactions.
The report highlights that in 2014, the R&C sector experienced the largest number of megadeals (deals with a value of over $1 billion) in several years. Overall volume in 2014 for deals greater than $50 million was 177, up 13% compared to the prior year, due to higher deal volume during the first half of 2014.
"The retail and consumer sector experienced a strong year in 2014 with both deal volume and value up from 2013 – and average disclosed deal size expanding 40% to $1.1 billion," said Leanne Sardiga, partner and PwC's U.S. retail & consumer deals leader. "Consumer sentiment continued to rise in 2014, benefiting from low energy prices, but retail sales numbers suggest consumers are not funneling that money into other purchases yet. Looking ahead, we expect consumers will remain cautiously optimistic in 2015, which may impact the key strategic choices retailers will make about how to serve the evolving demographics and consumer preferences."
According to PwC, private equity (PE) activity increased in the retail sector, but decreased in the consumer sector. For deals with values greater than $50 million, PE comprised 49% of retail deal volume and 57% of the retail deal value in 2014 compared to 32% and 36% in 2013, respectively
The report notes that R&C IPO volume and proceeds decreased from 2013. Total R&C proceeds reached $4.5 billion, representing a 57% decrease over 2013. Overall, the year saw 22 IPOs compared to 29 in 2013. The slowdown in the R&C IPO market was primarily due to the weaker sector performance in the second half of the year as compared to the same period in 2013.