Multibillion Dollar Transactions Drive U.S. Retail & Consumer Deals During
First Quarter 2013, According to PwC US
Total Deal Value and Volume Surges 590% and 59%, Respectively, Year-Over-Year
R&C IPO Proceeds Raised in Q1 2013 Jumps More Than 300% Compared to Q1 2012
NEW YORK, April 29, 2013
NEW YORK, April 29, 2013 /PRNewswire/ --U.S. retail and consumer merger &
acquisition (M&A) activity during the first quarter of 2013 was defined by six
multibillion dollar transactions, including one of the largest consumer
products deals in history, and alternative deal structures employed to achieve
strategic objectives, according to PwC's U.S. retail and consumer deals
insights Q1 2013 report released today.
For the three month period ending March 31, 2013, there were a total of 27
deals in the retail and consumer sector with disclosed values greater than $50
million, accounting for $39.8 billion in deal value. Deal volume increased 59
percent from the 17 deals during the first quarter of 2012, while deal value
rose 590 percent from $5.8 billion in Q1 2012. Deal value was driven by the
purchase of HJ Heinz by Berkshire Hathaway Inc. and 3G Capital Partners Ltd (a
total value of $28 billion including the assumption of approximately $4.5
billion of debt). Excluding the Heinz transaction, total deal value for the
quarter was still more than double that of the prior year's first quarter.
On a sequential basis, deal activity in the retail and consumer sector
declined in volume from the highs in the fourth quarter of 2012 due in part to
the pressure to execute deals in 2012 before the fiscal cliff and pending tax
increases, according to PwC.
"The potential negative impact of the fiscal cliff on transactions during the
first quarter of 2013 was more subdued than anticipated as deal activity was
up significantly compared to the first three months of 2012," said Leanne
Sardiga, partner and PwC's U.S. retail & consumer deals leader. "The
attractiveness of the retail and consumer sector as a whole, along with
continued availability of capital from both corporates and private equity
players, contributed to a positive retail and consumer deals environment. The
jump in total deal value was driven by several multibillion dollar
PwC notes that private equity (PE) buyers continued their positive momentum
from 2012, as announced deals with values greater than $50 million were up 18
percent in volume from Q4 2012. PE deal values increased to $31.3 billion in
Q1 2013 compared to $3.8 billion in Q4 2012 and $800 million in Q1 2012.
Although the increase was largely due to the Heinz deal, the total PE deal
value was still $7.8 billion even excluding that deal, which was just below
the recent peak seen in Q2 of 2012. In fact, since 2007, there have been only
six other quarters with PE deal value in the retail and consumer industry
exceeding $7 billion.
Cross border activity has been trending up and represented 44 percent of deal
volume in Q1 2013 compared to 40 percent on average annually over the last
five years. Outbound deal activity has been more prevalent so far in 2013.
In recent quarters, the retail and consumer sector has also seen continued
activity in corporate restructuring and spin-offs, as companies reassess their
portfolios and positioning in an increasingly competitive environment. Recent
corporate spin-offs have generally focused on realigning businesses to
distribution channels or high versus low growth product segments. Only one
spin-off was noted during the first quarter of 2013, according to the report.
Additionally, there were several large divestitures during the quarter.
Divestitures as a percentage of deal volume were up slightly to 31 percent
during the quarter versus 30 percent in Q4 2012 and Q1 2012.
"The overall IPO market was punctuated by a strong start and finish to the
quarter, with a small pause from mid-February to early March, demonstrating
the importance of new issuers being ready to tap the equity market when the
IPO window is open," added Sardiga.
Total retail and consumer industry IPO proceeds raised in the U.S. in the
first quarter of 2013 came in strong, far exceeding the comparative period in
2012. Total proceeds raised during Q1 2013 were $1.8 billion, up 50 percent
from proceeds of $1.2 billion in Q4 2012 and up more than 300 percent from the
$431 million raised in Q1 2012. Volume in the first quarter of 2013 was on par
with the fourth quarter of 2012 with six IPOs closing and up slightly from the
first quarter of 2012, which had five IPOs close.
"Several alternative deal structures announced during the quarter indicate
that retail and consumer companies are pursuing alternatives to grow and
improve operations strategically. In addition, the positive trend seen with
large cap deals during the quarter, combined with strong corporate balance
sheets, continued low interest rates and relatively high funds available for
investment at private equity funds should allow for retail and consumer deal
activity to continue its upward path in 2013. We expect companies to focus on
international expansion, strengthening omnichannel capabilities, and improving
profitability through divestment of non-core operations or deals which
represent opportunities for cost savings," Sardiga said.
PwC's U.S. retail and consumer deals insights is a quarterly analysis based on
data for transactions with a disclosed deal value greater than $50 million, as
provided by Thomson Reuters through March 31, 2013, and supplemented by
additional independent research. Information related to previous periods is
updated periodically based on new data collected by Thomson Reuters for deals
closed during previous periods but not reflected in previous data sets.
PwC's Deals practitioners help corporate and private equity executives
navigate transactions to increase value and returns. In today's increasingly
daunting economic and regulatory environment, our experienced M&A specialists
assist clients on a range of transactions from smaller and mid-sized deals to
the most complex transactions, including domestic and cross-border
acquisitions, divestitures and spin-offs, capital events such as IPOs and debt
offerings, and bankruptcies and other business reorganizations. We help
clients with strategic planning around their growth and investment agendas and
advise on business-wide risks and value drivers in their transactions for more
empowered negotiations, decision-making and execution. We help clients
expedite their deals, reduce their risks, capture and deliver value to their
stakeholders and quickly return to business as usual. Our local and global
deal strength is derived from over 1,400 deal professionals in 21 cities in
the U.S. and over 9,800 deal professionals across a global network of firms in
75 countries. In addition, our network firm PwC Corporate Finance provides
investment banking services within the U.S. For more information, visit
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