Foreword
Welcome to our Consumer Products M&A Insights review, that looks to capture both the latest macro-economic and Consumer Products M&A trends, alongside our perspectives of the M&A environment and the key factors driving deals within the sector.
In our previous review issued in Summer 2014, we highlighted the initial signs of recovering deal activity with investors being spurred on as consumer confidence returned to positive territory for the first time in nearly a decade. This was reinforced by our CFO survey which also indicated a strong shift in the sentiment expressed by business leaders towards more positive expansionary strategies.
Indications of the long anticipated uptick in deal activity are yet to fully feed through into reported European deal activity levels. Total deal value levels (for those deals over €200m) in 2014 of €39.7 billion were well ahead of the €33.6 billion of deals seen in 2013, albeit with 34 deals of this size in 2014, one fewer than in 2013. The six deals (over €200m) in the first four months of 2015, with a combined value of €7.2bn, offer an early indication of ongoing deal activity, albeit the time lag in deal reporting means that it is likely the levels in this period will be revised upwards as the year progesses.
Whilst our review is focussed on significant trends in the European market, it would be remiss not to mention the significant global interest of investors in the Consumer Products sector, with 3G Capital following on its previous acquisition of Heinz in 2013 with its proposed acquisition of Kraft, US based Nomad Food's acquistion of Birds Eye, Coty's acquisition of Procter & Gamble's beauty and haircare products, coupled with Asian buyers also looking to make major acquisitions in the sector as evidenced by Suntory's acquisition of Beam. In terms of ongoing sector attractiveness, the consumer sector is seen as offering significant resilience as well as areas of growth opportunities in specific sector categories. We expect these North American and Asian investor deal corridors to be a significant driver of deal activity going forward.
One of the other significant key themes highlighted in our review is that a number of the major consumer product players have transitioned from evaluating their existing market positions to now implementing their future growth strategies. A key feature of this involves the divestment of non-strategic assets to increase focus on key market positions that offer both sustainable earnings and ongoing growth.
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