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The Deloitte Consumer Products M&A Survey: July 2012

Rising to the challenge

Background

We are pleased to present our latest Consumer Products M&A survey – Rising to the challenge. This is the fourth biannual survey of CEOs, CFO and M&A directors of leading Consumer Products companies (publicly listed or private UK).

The report provides our insights from a macro-economic perspective and analysis of M&A activity across the key Consumer Products sub sectors from M&A data provided by 25 European Consumer Products companies. This report also gives our view of the M&A outlook, future profitability levels and actions to address the changing patterns in consumer behaviour.

Key findings

  • Our survey indicates that there has been a retrenchment in attitudes around the anticipated level of M&A over the next twelve months, with a third of participants now indicating a pessimistic view. However, it is also noteworthy that just under 30% of respondents were very optimistic about the outlook for M&A.
  • Despite ongoing market uncertainty in the Eurozone and the falling back of the UK and a number of other European economies into a technical recession in the first quarter of 2012, underlying M&A drivers in the Consumer Products sector remain strong.
  • For those companies who participated in the survey, market consolidation to achieve economies of scale was seen as one of the principal drivers for undertaking M&A, along with international expansion into high growth markets and distress driven deals.
  • Consumer Product companies continue to face the challenge of passing through price increases against a background of significant price-led retail competition.
  • In some sectors the ongoing pressure for greater economies of scale is likely to bring about greater consolidation.
  • In terms of obstacles to undertaking M&A, financing was not seen as one of the key restraints on current deal doing. Economic uncertainty, pricing expectation gaps and shareholder/director caution were all identified as key reasons.
  • In the 12 months to 31 May 2012, there were 23 deals with transaction values in excess of €500m. Flagship assets have continued to attract a valuation premium, but our survey indicated anecdotally that the pricing gap between buyer and seller may be closing slightly, particularly in the small and medium enterprise market.

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The Deloitte Consumer Products M&A Survey – Rising to the challenge

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