MONTHLY M&A INSIDER
A MERGERMARKET REPORT ON GLOBAL M&A ACTIVITY
GLOBAL OVERVIEW AMERICAS: LATIN AMERICA NORTH AMERICA ASIA-PACIFIC EUROPE MIDDLE EAST & AFRICA ABOUT MERRILL CORPORATION
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MONTHLY M&A INSIDER
Part of The Mergermarket Group
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GLOBAL M&A ACTIVITY DISAPPOINTED IN Q3 WITH DEAL VOLUME FALLING BY 16% FROM 3,203 IN Q3 2011 TO 2,679 IN Q3 2012. DEAL VALUE PAINTS A SIMILAR PICTURE, DROPPING BY A FIFTH FROM US$579BN TO US$461BN OVER THE SAME PERIOD. Robust deal values in North America Casting a look to regional activity, North America stands out as a global bright spot: while Q3 has seen a decline in overall M&A, aggregate deal value climbed to the highest level since the ﬁrst quarter of last year at US$235.7bn. Even in the private equity arena – a space hard hit by the slowdown of the past year – buyout and exit values witnessed healthy year-on-year increases. It appears that fewer, higher-value deals are boosting dealmaking among both ﬁnancial and strategic investors. Certainly, this recent trend is evident in the consumer sector – particularly in relation to North American Kraft Foods’ spinoff of its snacks business. The deal, valued at US$26bn, ranks as the largest North American transaction in the quarter and forms part of a string of spinoffs by international food groups over the past year. In the consumer sector itself, the spinoff comprised 74% of North American consumer deal value, and contributed heavily to the sector’s eight-fold increase in deal value between Q3 2011 and Q3 2012. With 16.6% of global M&A value, the consumer sector outstripped a number of other industries to become Q3’s second biggest in North America – in comparison, the space accounted for just 2% of global deal value in Q3 2011. a Singapore-based conglomerate with extensive food and brewing operations. In a related transaction, Dutch brewer Heineken moved to acquire a majority stake in Asia-Paciﬁc Breweries (APB) for US$6.6bn in July – indeed, as F&N holds a 40% stake in APB, Heineken’s move may well have made F&N a more attractive target for TCC. Turning to deals in the pipeline, Richard Schulze, who owns a 20.3% stake of Best Buy Co Inc, voiced his plans to take the company private – a move with a projected value of US$6.2bn.
Traditionally, after the seasonal slowdown in the summer holiday period, M&A activity picks up in the ﬁnal quarter of the year, with a particularly strong showing in December. Admittedly, the early weeks of the fourth quarter have not inspired much conﬁdence. It was widely expected that the US$45bn merger of BAE Systems and EADS – the defence sector’s biggest deal in a decade – would trigger a rush of deal-making in the industry. But with the deal failing, these hopes have been dashed. Yet with corporate reorganisation taking place among some of the world’s largest consumer groups and other strategic investors expanding into emerging markets to seize new opportunities through M&A, it shows that despite the climate of slowed deal-making and general economic malaise, there remain opportunities for growth.
A growing appetite for Consumer deals
While the Kraft demerger accounts for the bulk of consumer activity in North America, there are a number of other recent, high-value consumer deals that have come to market across the globe. For instance, TCC Assets announced in September its US$10bn acquisition of Fraser & Neave (F&N),
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