This review covers the mergers and acquisitions made between 1-Jul to 30-Sep-2016 in the global retail and consumer goods sector for transactions, for which the deal value has been disclosed. The M&A data have been collated from company press releases and regulatory filings. Only those transactions with deal value more than US$100 million are considered for the analysis.
Analysis of M&A transactions
In Q3-2016, there were 22 M&A transactions spread across 13 categories. The total value of the transactions was about US$36.41 billion. Of the 22 transactions, about 70% of the total transactions by value were from four categories – food & beverages, furniture & home decor, consulting & software and fuel retail. Food & beverages with aggregate deal value of $11.93 billion from four transactions topped the list. Food & beverage category accounted for one-third of the total deal value. In food & beverages category, Danone buying WhiteWave Goods topped the list with deal value of $10.4 billion which was about 29% of the total M&A transaction in Q3-2016.
M&A transactions
Food & Beverages
In the food and beverages category there were four M&A transactions totaling about $11.93 billion. The average deal size was $2.9 billion boosted by a single transaction of WhiteWave foods being acquired by France-based Danone for $10.4 billion. Through the acquisition of WhiteWave, Danone added to its portfolio, U.S. soy milk brand Silk and expanded its presence in the organic food category. The next large deal was the acquisition by Coca-Cola Femsa, Latin America’s largest Coke bottler. Coca-Cola’s Brazilian subsidiary Spal acquired Brazil-based Vonpar for $1.09 billion. Vonpar has three bottling facilities and five distribution centers in Brazil. In the semi-processed food category, Indonesia-based instant noodle maker Indofood divested its entire 83% stake in vegetable processor China Minzhong Food to Marvelous Glory Holdings for $484 million. In the beverages category, Toronto-based Cott Beverages acquired Florida-based S&D Coffee for $355 million. The acquisition of S&D was in line with Cott’s strategy of focusing on businesses with higher growth while continuing beverage diversification outside of carbonated soft drinks, shelf stable juices and large format retail.
Furniture and home decor
In the furniture and home décor category South Africa-based Steinhoff International Holding acquiring Mattress Firm was significant transaction. Steinhoff acquired Texas-based Mattress Firm for about $3.8 billion. This deal was besides Steinhoff acquiring UK-based discount chain Poundland Group for $787 million. Steinhoff with the acquisition intends to create a large mattress retail distribution network and facilitate its entry into the U.S. market. Home-improvement retailer, Home Depot acquired a direct marketer of repair products, Interline Brands for $1.63 billion, its biggest acquisition in nearly a decade. Interline sells maintenance and repair products to customers like property managers of housing complexes, and government and educational institutions. Home Depot with the acquisition aims to serve professional contractors.
Consulting & software
In the retail consulting and software space there were five M&A transactions totaling about $4.40 billion. Honeywell acquired Intelligrated which designs, manufactures, integrates and installs complete warehouse automation solutions and software. Honeywell paid $1.5 billion for Intelligrated which it bought from a company backed by Permira funds. The next deal was of Thoma Bravo acquiring automotive marketplace and software solutions provider Trader Corporation from Apax Partners for $1.22 billion. Trader Corporation offers digital advertising tools and marketing software solutions to automotive dealers. Mastercard increased its footprint in UK through acquisition of controlling stake in VocaLink Holdings, the payments processor that handles most payroll and household bill processing in the U.K. Mastercard paid $920 million for a 92.4% stake in VocaLink.
Also Read : Summary of M&A in Healthcare and Pharma Sector
Blackstone and New Mountain Capital (NMC) invested $570 million equity investment in JDA Software. The equity investment by Blackstone and JDA carried no interest costs for JDA and was used to retire existing debt by JDA. Voice and language solutions provider Nuance Communications acquired California-based TouchCommerce for $215 million in cash and stock.
Fuel retail
Alimentation Couche-Tard has been on acquisition spree in 2016. In 3rd Quarter Couche-Tard acquired gas-station chain CST Brands at a premium of 42% paying $4.4 billion. The acquisition expands Couche-Tard’s presence in Texas and eastern Canada. The earlier acquisition of Couche-Tard in 2016 included the purchase of Ireland-based Topaz Energy Group the biggest convenience and fuel retailer of Ireland and buying of A/S Dansk Shell’s downstream retail business in Denmark.
e-Commerce
Wal-Mart Stores bought e-Commerce startup Jet.com for about $3.3 billion. Walmart’s acquisition is one of the largest ever purchase of an e-commerce startup in the U.S. Walmart intends to narrow the gap with e-commerce player Amazon through the acquisition.
Fashion and lifestyle
French cosmetics firm L’Oreal acquired New Jersey-based IT Cosmetics for $1.2 billion. The acquisition was largest by L’Oreal in eight years and brings more than 300 skin-care and makeup products to its portfolio. IT Cosmetics was co-founded in 2008 by a former TV news anchor and a beauty-pageant winner. U.S.-based G-III Apparel Group acquired Donna Karan International for $650 million from LVMH the French luxury-goods maker and retailer. The sale possibly reflected LVMH’s inability to generate profitable growth from the fashion brand Donna Karan.
Hypermarket
In the Hypermarket section Britain’s second largest grocer, Sainsbury’s completed the takeover of Home Retail Group, the owner of Argos and Habitat brands for about $1.8 billion. The deal was announced after the South Africa-based Steinhoff withdrew from pitching for Home Retail Group.
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Apparel & foot ware
Shanghai-listed fashion retailer, V-Grass Fashion acquired the Chinese business of E-Land Group’s Teenie Weenie for about $900 million. For V-Grass, the acquisition possibly will help to support its falling sales. As part of restructuring its business V-Grass plans to focus on Chinese middle-class customers who are willing to pay more for premium products. The Korean brand Teenie Weenie, known for casual-wear items has about 1,400 stores in China, compared with about 215 of V-Grass.
Discount Stores
South Africa-based Steinhoff International Holdings acquired British discount chain Poundland for $787 million. Poundland operates more than 900 stores across U.K., Ireland and Spain. Steinhoff expects to strengthen its foothold in Europe with acquisition of Pounland. For Poundland, the Steinhoff offer came at a time when business was on a downward slope due to surge in online shopping and a price war among the U.K.’s largest supermarket chains.
Restaurants
Primavera Capital and Ant Financial an affiliate of Alibaba Group Holding bought a stake in Yum China for $460 million. Primavera invested $410 million and Ant Financial invested $50 million. Yum which owns KFC and Pizza Hut plans listing in the New York Stock Exchange.
Logistics
Logistics provider C.H. Robinson acquired APC Logistics for $225 million. APC provides freight forwarding and customs brokerage services in Australia and New Zealand. APC will be integrated to Navisphere, C.H. Robinson’s Global Forwarding division and single global technology platform. The acquisition may enable C.H. Robinson to capture some shipments moving from Europe and Asia to Australia.
Consumer electronics and computers
Mill Road Capital Management acquired headphones maker Skullcandy for $197 million paying 43% premium. The agreement came after a two-month public takeover battle between Mill Road and Incipio, a maker of consumer-technology products. Skullcandy had to pay a termination fee to Incipio for exiting from the merger agreement it had signed.
Pets
In the Pets category, rural lifestyle retail store chain Tractor Supply Company (TSCO) acquired pet specialty retailer Petsense for $116 million. M&A activities so far in 2016 have been quite active in the global retail and consumer goods sector specially in the U.S., Europe and Asia region. One can expect more consolidation happening in the food and beverages sector and in the e-commerce space. One can also expect consolidation happening amongst IT consulting and product players providing niche products and services in the retail sector and e-commerce startups getting acquired at much lower valuation.
