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Consumer Product Deals Quarterly - Q1 12 - Lower US deal volumes mask signs of increasing deal appetite - EY - Global

Consumer Product Deals Quarterly: Q1 12

Lower US deal volumes mask signs of increasing deal appetite

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Europe once again dominated cross-border deal flow in
Q1 12.

Europe continued to dominate cross-border deal activity in the first quarter, in buy and sell side activity. However, we believe that as the year progresses the pendulum will start to swing back in favor of the US.

There were 98 cross-border deals in Q1 12, a decrease of 27 deals (22%) compared to Q4 11, a slightly larger proportionate decline than the 18% fall in overall announced deals.

Europe once again dominated cross-border deal flow in Q1 12. As the buyer region, Europe's proportion increased from 40% in Q4 11 to 51% in Q1 12, with the number of deals remaining constant at 50. In comparison, the number of deals with North America as the buyer region decreased from 35 deals in Q4 11 to 23 deals in Q1 12 (a 34% decrease).

Regional volume comparisons (buy/sell combined), Q2 09 to Q1 12


Regional volume comparisons (buy/sell combined), Q2 09 to Q1 12

Source: EY's Analysis of Thomson Reuters Data

Europe was once again the dominant seller region for cross-border deals, with a 58% share (a 10% increase on Q4 11), although the absolute number of deals fell from 60 in Q4 11 to 57 in Q1 12. North America's cross-border deal share remained constant at 17%, but the absolute number of deals decreased from 21 in Q4 11 to 17 in Q1 12.

Regional value comparisons (buy/sell combined), Q2 09 to Q1 12


Regional value comparisons (buy/sell combined), Q2 09 to Q1 12

Source: EY's Analysis of Thomson Reuters Data

Despite the first quarter's further swing in favor of European dominance of cross-border deal activity, we continue to believe that the trend may turn towards the US as the year unfolds.

Shortly after the end of the quarter, Coty announced a hostile US$10b offer for larger rival Avon and Molson Coors announced it had agreed to buy StarBev for US$3.5b.

These announcements are in line with the market sentiment we are picking up from client relationships: US companies have the firepower and the appetite for deals and the degree of due diligence work we are currently observing suggests this will translate into increased transaction activity.



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