The Consumer – H1 2016 deals summary
August 09, 2016
Our last issue was dominated by the huge $77bn merger between AB InBev and SABMiller, and there are still disposals arising from that. Instead, the first half of 2016’s activity was rather pick and mix, ranging from agriculture and homewares, to drinks, appliances, and health & beauty.
The initial attempt of Mondelez to acquire Hershey, would have dominated the deals in the period and would have totally reshaped the confectionery sector. But at the time of writing, that offer has been rebuffed.
Cutting the list another way, there was activity both from corporate buyers and PE houses, and more evidence of some key trends we’ve been monitoring for a while. Buyers in emerging markets continued to look for promising Western brands and businesses, as with Quingdao Haier’s acquisition of General Electric’s appliances business and Chinese cosmetics maker Shanghai Jahwa (Group) Co Ltd has reached an agreement to acquire Mayborn Group, the parent company of the largest British nursing bottles producer Tommee Tippee. The big conglomerates continued to hone their portfolios (with Unilever selling its AdeS soy beverage business in Latin America to Coca Cola), and the trend towards consolidation and ‘premiumisation’ in Health & Beauty also continued (as evidenced in Revlon’s acquisition of Elizabeth Arden and Johnson & Johnson buying the Vogue natural hair products company). On the PE side, the most notable deal was probably the Baupost stake in private-label food producer firm Bakkavor, not least because Baupost are known to take a slightly longer-term perspective than is typical in PE. Likewise the privately held investment group, JAB Holdings continued its buying spree in food and drink retail, with the $1.4bn purchase of Krispy Kreme Donuts.
Looking ahead, what do we expect? Most obviously, more disposals from AB InBev/SABMiller merger: Peroni and Grolsch were very sought-after brands snapped up by Asahi, and there are likely to be further opportunities, especially in Central Europe. Beyond that, although some of the deals in this half were relatively small, they could signal some emerging trends. The Quingdao Haier deal, for example, could herald more transactions in the ‘whiteware’ area of home appliances, as Chinese firms look to move up the industrial value chain and apply their technical expertise to staples like fridges and washing machines. This could see Chinese manufacturers becoming serious competitors to the established dominance of Germany and Japan in this area. Homecare products is another interesting area, as the big conglomerates look to establish (or acquire) genuinely global brands in this segment. And last, but definitely not least, Brexit. In the wake of the referendum sterling has fallen significantly, and although it’s since recovered slightly, sterling-based assets could well be looking cheap to opportunistic overseas buyers.