Consumer Products M&A Insights
Maintaining the momentum
The last 12 months have seen strong European deal activity against a backdrop of economic and consumer uncertainty. Can momentum continue into 2018?
Overview of consumer product M&A activity
- Significant merger and acquisitions (M&A) deal activity was seen within the European consumer products sector in 2017.
- 51 large European deals – with deal values over €200 million – were either announced and / or completed from 1 July 2016 – 30 June 2017.
- The combined value of these deals was over €300 billion, compared to 34 deals in 2016 amounting to €140 billion.
- 18 of these deals were valued at more than €1 billon.
- The “US deal corridor” continues to show high levels of activity, with the US remaining the top “target” country for large transactions by European buyers (accounting for 16 of the 51 large deals).
- Food and Beverage accounts for around 55% of the large deals by volume. The Personal and Household care sector has also seen a noticeable increase in activity.
Sector by sector activity
Our report reviews deal activity from 1 July 2016 - 30 June 2017 and provides insight in to likely M&A trends for 2018 in five areas within the consumer products sector.
Large deal activity characterised mainly by opportunistic acquisitions into new product categories and expanding presence in strategic markets.
We expect activity to be driven by continued consolidation and focus on addressing changing consumer preferences (especially amongst millennials) towards natural, healthier and local alternatives.
The European beverage sector recorded the highest activity by deal value, courtesy of the €92bn ABInBev - SABMiller merger.
M&A activity within this sector over the next year is likely to be driven by increased consolidation in some of the more fragmented beverage categories, continued consumer interest in craft and premium products, and the strengthening consumer focus on diets and health regimes.
Personal and household goods
Personal and homecare has seen a noticeable increase in activity and was the top sector in terms of number of large deals.
2018 deal activity is likely to see a focus on improving market position in existing territories or gaining access to new markets, with nimble, innovative businesses likely to be highly attractive acquisition targets.
Deal values and volumes were lowest in the Tobacco sector, with one large deal recorded, namely British American Tobacco’s acquisition of the 57.83% stake in Reynolds American Inc.
Over the next 12 months, we expect activity to be driven by the targeting of players in developing markets, investment in next-generation vapour and tobacco-heating products to offset declining cigarette volumes, and investments into innovative businesses offering nicotine based alternatives.
Agriculture and livestock
Factors that are expected to fuel deal activity in this sector over the course of 2018 include geographic portfolio expansion to build dominance and secure supply source and larger players consolidating and strengthening their market position supported by increasing global demand for animal protein.
More information about M&A
For a comprehensive overview of M&A activity in 2017, and an outlook on 2018, download the M&A Insights report. Do you want to know more about M&A, and how to go around it? Please feel free to contact one of our experts.