A widespread global recovery in mergers and acquisitions (M&A) in the food, drink, consumer goods and retail sectors has slowed in the second half of 2011 due to low consumer confidence and uncertainty over the euro zone financial crisis. But companies worldwide remain eager to grow, enter new markets and consolidate, and are preparing to come back strongly when confidence returns in 2012 and 2013, according to a new report from KPMG International.
These are the main conclusions of a global interview-based study of consumer markets M&A activity, Consumer Markets M&A Outlook: Pursuing Growth in an Uncertain World. on trends for the past two years of activity, and interviews with KPMG M&A professionals in 23 countries, and supplemented by comments from private equity (PE) executives, the study shows that the fundamental drivers for growth remain in place in most countries.
It also shows, however, that companies are wary of entering into large deals while the euro zone crisis remains unresolved and consumers continue to adjust to changing economic conditions.
Although debt financing remains difficult, especially for deals $135 million or more, the report indicates that financing is available for good quality mid-range deals, where target companies have strong customer bases.
In some markets relatively unaffected by the euro zone, notably Norway, banks are starting to compete to put together structured financing deals for the right assets. The study says that lenders in these markets are even coming under pressure to keep terms reasonable.
The food and drink sector is particularly active, with more than 900 transactions either announced or completed during 2011, more than all other FDCG sectors put together.
The 23 countries covered in the report areBrazil, Canada, Mexico, US, Australia, China & Hong Kong, Japan, India,Philippines, Singapore, Belgium, France, Germany, Italy, netherlands, Norway, Poland, Russia, S Africa, Spain, Sweden, Switzerland and the UK.