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Consumer Products Deals Quarterly - Q3 2011 - EY - Global

Consumer products 3Q 11
transaction highlights

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The third quarter provided examples of the growing economic power of global challengers from emerging markets.

Deal volumes decreased in the third quarter and the long-term moving average also declined, but activity in Asia Pacific continued to grow.

While large strategic transactions are less dependent on the economic cycle, we expect continued economic uncertainty is likely to weigh on the overall pace of deal activity.

Highlights from this quarter include:

Global Consumer products corporate and private equity (PE) transactions scorecard by sector


Deals Announced3Q112Q11Seq % change3Q113Q10YOY % change
Corporate deals by subsector
Beverages62587%624635%
Food1581644%158161-2%
HPC2239-44%2224-8%
Tobacco46-33%4  
Total246267-8%2462316%
       
PE deals by subsector (based on seller sector)
Beverages10743%1011-9%
Food2841-32%2853-47%
HPC78-13%7540%
Tobacco2     
Total4756-16%4770-33%
       
Total consumer products (CP) deals by sector, Corporate and PE
Beverages726511%725726%
Food186205-9%186214-13%
HPC2947-38%29290%
Tobacco660%61500%
Total293323-9%293301-3%

Emerging market challengers show their growing power

The third quarter provided examples of the growing economic power of global challengers from emerging markets, which are looking to strengthen their positions both in their domestic markets and through overseas expansion.

The theme has several elements illustrated in the quarter’s largest deals:

  • Strengthening positions in domestic distribution networks or supply chains
  • Expansion into developed markets
  • Generation of economies of scale through consolidation

Deal activity peaked for now

Looking ahead to the end of the year, we expect that the level of deal activity in the fourth quarter of the year will moderate further.

However, we do not expect that deal activity will fall back close to the level reached in 2009.

Many consumer products companies have regained the capability to do deals. As well as being financially stronger, by operating in the uncertain economic conditions of the last three years, management teams and shareholders have also become more comfortable doing business with a higher degree of volatility in the business environment.

Companies which are struggling and lack the capital to compete, will become the targets of opportunistic M&A.



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Consumer Products Deals Quarterly: Q3 2011

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