Consumer, retail M&A deal volume dips 16 pc in 2017; outlook bullish: Report

Merger and acquisition (M&A)activity in the consumer and retail sector took a breather in 2017 with deals worth USD 392 billion announced in 2017, down 16 per cent from the year ago period, says a report.

According to A T Kearney's 2018 Consumer and Retail M&A Report, consumer and retail M&A deal volume declined in 2017, but is set to increase this year as strategic, cross-industry acquisitions were seen as a way to new markets.

"In India, we believe M&A will increasingly be a faster and viable means for consumer companies to gain access to brands, capabilities and customers than organically possible," said Debashish Mukherjee, Partner, Head, Consumer and Retail Industries.

The report further noted that with the completion of several political elections around the world, and both PE firms and consumer products companies reporting record amounts of cash reserves, a rise in global M&A deals is likely.

Much of the wait-and-see climate we saw in 2017 that has characterised M&A globally has dissipated. At the same time, with interest rates finally on the uptick, we are likely to see an increase in US companies making innovative acquisitions to stay relevant, said A T Kearney Partner Bob Haas, leader of the firm's global Mergers & Acquisitions Practice and co-author of the report.

Based on interviews with C-level retail executives, the report noted that the market is characterised by optimism as 71 per cent of respondents reported that M&A is creating value, up from 48 per cent last year.

A T Kearney analysed more than 1,00,000 consumer and retail transactions from 2006 through Q1 2018, spanning sectors such as food and beverage, grocery, pharmacy, and personal care.

The study also included insights from C-level executives of global consumer and retail companies based on a survey that sought their perspectives on trends in consumer and retail sectors and future M&A activity.