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Report: Retail M&A activity strong in Q2


Deal volume in the retail and consumer sector is up, but deal value is down.

Deal volume in the second quarter in the sector reached its highest level in the past 12 months, with 282 announced deals, up 5% over the first quarter, according PwC’s Q2 2016 retail and consumer M&A report.

In contrast, deal value dropped to $18.0 billion, a decline of 44% and 25% as compared with second quarter 2015 and first quarter 2016. It was the lowest deal value recorded in the sector in the past eight quarters and was driven by both a fewer number of mega deals with lower deal values and a decrease in EBITDA multiples.

Key transactions in the quarter included the Reimannfamily (through its JAB group of companies) and BDT Capital Partners’ announcement to acquire Krispy Kreme Doughnuts Inc., for $1.4 billion, and HanesbrandsInc.’s announcement to acquire Pacific Brands Limited, an Australian wholesaler and retailer of consumer clothing, for $817 million.

Despite challenges from global economic uncertainties, factors such as continued shareholder activism and renewed interest in private equity bode well for companies in the sector, according to the PwC report.

“Companies will continue to monetize real estate holdings through non-recourse financing, sale leasebacks and, more recently, spin-offs of real estate and REIT conversions,’ the report said. “Given the large footprint of stores and operations, we expect these transactions to continue to be prevalent within the retail and consumer sector.”

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