PWC Deals Retail Consumer Insights q2 2016
PWC Deals Retail Consumer Insights q2 2016
PWC Deals Retail Consumer Insights q2 2016
Optimize deals
Executive summary
The retail and consumer sector continued its positive
momentum into Q2 2016 with 282 announced deals its
highest level in the past four quarters and a 5% increase
over Q1 2016. While the number of mega deals (transactions
exceeding $1.0 billion) during the quarter dropped from
seven to four mega deals when compared with Q1 2016,
there were 11 mega deals in the first half of 2016 compared
with nine mega deals in the first half of 2015.
Contrary to this quarters increase in deal volume, deal
value dropped to $18.0 billion a decline of 44% and 25%
as compared with Q2 2015 and Q1 2016. This 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. The
four mega deals announced in the quarter had a total value
of $9.3 billion compared with five mega deals totaling $23.2
billion in value in Q2 2015 and seven mega deals totaling
$17.6 billion in value in Q1 2016. EBITDA multiples averaged
10.3x in the quarter, a decline from 11.3x in Q1 2016. Deal
value during the quarter was led by deals in the household
and personal products subsector as evidenced by the largest
transaction of Q2 2016, which is the pending Henkel AG & Co.
KGaA's acquisition of Sun Products Corporation for
$3.6 billion.
Looking ahead, we see positives results with respect to
mega deal value led by the pending $10.4 billion acquisition of
WhiteWave Foods Co. by Danone, which was announced on
July 7th, 2016.
Retail and consumer deal volume and value
2015
2016
310
300
300
290
301
280
292
282
265
258
270
260
269
257
250
240
230
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Number of deals
2014
90
80
70
60
50
40
30
20
10
0
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US Retail and Consumer
Deals Insights
Q2 2016 update
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44%
$0-$50m
33%
15%
15%
18%
20%
$50-$100m
$100-$250m
Q1 2016
10%
$250-$500m
$500m-$1b
Q2 2016
16%
3%
9%
10%
7%
$1b+
Transaction multiples
EV/Revenue
3.0
2014
24.2x
2015
25.0x
16.5x
2.5
2.0
30.0x
2016
11.4x
11.0x
1.5
20.0x
11.3x
15.0x
13.8x
10.3x
15.0x
10.0x
1.0
EV/EBITDA
3.5
5.0x
0.5
1.5x
2.9x
1.6x
2.2x
1.3x
1.4x
1.8x
1.9x
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
0.0
0.0x
EV / Revenue
EV / EBITDA
Source: Capital IQ
2016
60
50
79
40
80
76
65
72
69
59
30
63
20
10
$17.4 $11.6 $55.0 $2.5
$1.5
0
Q3
Q4
Q1
Q2
Q3
Q4
Q1
90
80
70
60
50
40
30
20
10
0
Q2
PE deal volume
2014
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US Retail and Consumer
Deals Insights
Q2 2016 update
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0%
Canada
3%
85%
8%
Europe
United
States
AsiaPacific
0%
Africa/Middle
East/Central Asia
3%
Latin
America
2015
7
2016
8
7
6
1,500
1,000
2
1
500
2
0
0
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Number of IPOs
2,000
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US Retail and Consumer
Deals Insights
Q2 2016 update
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Q2 2016 <1%
3%
15%
9%
3%
10%
12%
10%
16%
7%
282
$18.0B
24%
<1%
20%
1%
7% 8%
51%
3%
Agribusiness (crops, fertilizer, animal processing)
Apparel, footwear and accessories
Food and beverage (including alcohol)
Grocery, drug, discount, and mass
Household and personal products
Internet / e-commerce
Other consumer products
Restaurants
Specialty retail / other (electronics, home improvement, auto repair, etc)
$9,119
21
Food and beverage (including alcohol)
$2,871
67
Restaurants
$1,729
21
$1,724
35
$1,706
43
56
$508
Grocery, drug, discount and mass
23
$211
Agribusiness (crops, fertilizer, animal processing)
$85
Internet/e-commerce
$60
Optimize Deals
US Retail and Consumer
Deals Insights
Q2 2016 update
About PwCs
Deals Practice
Optimize deals
Authors
Chris LaPorta
Director, PwC's Deals Practice
646 471 7237
christopher.laporta@pwc.com
Danielle Brisky
Manager, Research & Analysis
415 498 7688
danielle.m.brisky@pwc.com
Smart deal makers are perceptive enough to see value others have missed,
flexible enough to adjust for the unexpected, aggressive enough to win favorable
terms in a competitive environment, and circumspect enough to envision the
challenges they will face from the moment the contract is signed. But in a
business environment where information can quickly overwhelm, the smartest
deal makers look to experienced advisors to help them fashion a deal that works.
PwCs Deals group can advise retail and consumer companies and retail and
consumer-focused private equity firms on key M&A decisions, from
identifying acquisition or divestiture candidates and performing detailed
buy-side diligence, to developing strategies for capturing post-deal profits and
exiting a deal through a sale, carve-out, or IPO. With more than 9,800 deals
professionals in 75 countries, we can deploy seasoned teams that combine deep
retail and consumer industry skills with local market knowledge virtually
anywhere and everywhere your company operates or executes transactions.
Although every deal is unique, most will benefit from the broad experience we
bring to delivering strategic M&A advice, due diligence, transaction structuring,
M&A tax, merger integration, valuation, and post-deal services.
In short, we offer integrated solutions, tailored to your particular deal situation
and designed to help you extract peak value within your risk profile. Whether
your focus is deploying capital through an acquisition or joint venture, raising
capital through an IPO or private placement, or harvesting an investment
through the divesture process, we can help.
For more information about M&A and related services in the retail and
consumer industry, please visit http://www.pwc.com/optimizedeals or
http://www.pwc.com/us/retail-consumer
About thedata
The information presented in this report is an analysis of deals in the retail and
consumer industry where the target company, the target ultimate parent company,
the acquiring company, or the acquiring ultimate parent company was located in the
Unites States of America. Deal information was sourced from Thomson Reuters and
includes deals for which targets have a target mid industry code that falls into one
of the following mid industry groups: Apparel Retailing, Automotive Retailing,
Computers & Electronics Retailing, Discount and Department Store Retailing,
Food and Beverage Retailing, Food and Beverage, Home Furnishings, Home
Improvement Retailing, Household & Personal Products, Internet and Catalog
Retailing, Other Consumer Products, Other Consumer Staples, Other Retailing,
Textiles & Apparel, and Tobacco. Certain adjustments have been made to the
information to exclude transactions which are not specific to the retail and
consumer sector or incorporate relevant transactions that were omitted from
the indicated mid industry codes.
This analysis includes all individual mergers, acquisitions, and divestitures for
disclosed or undisclosed values, leveraged buyouts, privatizations, minority stake
purchases, and acquisitions of remaining interest announced between January 1,
2014 and June 30, 2016, with a deal status of completed, partially completed,
pending, pending regulatory, unconditional (i.e. initial conditions set forth by the
buyer have been met but deal has not been withdrawn and excludes all rumors and
seeking buyers). Additionally, transactions that are spin-offs through distribution to
existing shareholders are included.
Percentages and values are rounded to the nearest whole number which may result
in minor differences when summing totals.
2016 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to
the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
Disclaimer:
This content is for general information purposes only, and should not be used as a substitute for consultation with professional
advisors.148535-2016 vc