2016 was a year of continuing strong levels of European deal
activity against a backdrop of uncertainty. Will deal momentum
continue throughout 2017?
Overview of consumer product M&A activity
Significant merger and acquisitions
(M&A) deal activity was seen within the European consumer
products sector in 2016
43 large European deals – with
deal values exceeding €200 million – were
either announced and / or completed in 2016*
The combined value of these deals
topped €200 billion, compared to 36 deals in 2015 amounting to
13 of these deals were valued at more
The United States emerged as the top
"target" country for large deal activity by European
buyers, with 11 of the 43 large deals involving the acquisition of
The food and beverage segments
accounted for over half of European large-deal activity
* period relates to the twelve month period to September
Our report reviews 2016 deal activity levels in five areas
within the consumer products sector – food, beverage,
personal and household goods, tobacco and agriculture &
livestock - and provides insight into the likely M&A trends for
Food: Strategic opportunities drive deals
Transactions in the food sector over the last 12 months were
broadly in line with 2015 activity levels, with strategic
opportunities in new and existing markets and growing focus on
health and wellness mainly driving deal activity.
Looking ahead, we expect consolidation and sustainable growth
plays to continue across the food segment's mainstream
categories whilst addressing changing consumer preferences.
Beverage: Mega-merger fuels activity
The completion of the mega-merger between the two brewing giants
ABInBev and SABMiller marked the largest beverage transaction since
we started our insights review back in April 2013 triggering
further M&A activity in the brewing space.
Deal activity is likely to continue with ongoing acquisitions of
premium spirit brands (including through asset swaps between major
players), search for alternative health and wellness product
offerings and continued interest in the high growth craft
Personal and household goods: deal activity remains
M&A activity in the personal, apparel and homecare space
continued its positive trajectory with personal care being the most
active segment in terms of large deal activity and corporate
acquirers leading the acquisition march in the segment.
2017 deal activity is likely to be underpinned by a continued
realignment of business models to build leading market positions
and due to the cyclical shift in the way the consumer's
preference is changing from buying products to experiences.
Tobacco: Further consolidation triggered
The number of large-scale M&A deals was lowest in the
tobacco segment; however, the recently announced proposed merger of
BAT and Reynolds will create the largest listed tobacco company in
the world by sales and is likely to trigger further consolidation
within the sector.
Further deal activity in 2017 is expected for companies that
provide growth opportunities in new geographic markets, boast
multi-channel distribution models and have a portfolio of products
that span across disposal (refill) and rechargeable categories.
Agriculture and livestock: commodity price volatility takes its
Whilst deal values were lower than the prior year, the sector
remains active from an M&A perspective.
Commodity price movements have been an important factor in the
industry over the past year and an increasing area of focus while
evaluating deals as previously hedged positions expire.
Over the course of 2017, we expect to see rising commodity
prices squeezing margins, with opportunities that deliver scale in
the form of volume growth and new markets including through
consolidation being key for the segment.
Merger and acquisition prospects for 2017
The UK and US political shifts over the past year have elevated
levels of economic uncertainty and, historically, there has been a
strong correlation between heightened policy uncertainty and
reduced M&A appetite. There is also, however, strong historical
evidence that M&A markets tend to recover quickly once such
Overall, we expect the following themes to influence M&A
activity this year:
The resilience of the UK economy
following Brexit and the continuing weakness of sterling
The impact of well-funded overseas
buyers, particularly through the American and Asian corridors into
the European markets
Continued demand for assets which
offer and enhance sustainable growth
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