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Consumer Products Deals Quarterly - Q4 2011 - US has strong deal pipeline - EY - Global

Consumer products deals quarterly: Q4 11

US has strong deal pipeline

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We have encountered a definite attitude that US companies are now more prepared to “muscle their way out of the downturn.”

There were 149 cross-border deals in Q4 2011, an increase of 16 deals (12%) compared with Q3 2011, in contrast to the 2% increase in total deal volumes. Europe continued to dominate regional deal activity, but we believe the US may become more active in 2012, both in pursuit of new emerging market growth opportunities and portfolio optimization.

Europe has strong deals

Europe has been the most significant region for deal activity in each of the last 12 quarters in terms of volume and in 9 of the last 12 quarters in terms of value. In Q4 2011, Europe was once again the most prolific deal-making region. Within Europe, France was notable for a greatly increased presence in total deals, accounting for a total of 17 corporate deals and 6 private equity deals, making it the second most active country in both categories.

In comparison, France was not in the top 10 for corporate deals in Q3 2011.

Regional volume comparisons, Q1 2009 to Q4 2011


Regional volume comparisons, Q1 2009 to Q4 2011

Source: EY’s analysis of FactSet Mergerstat data.


US economic recovery

In the coming quarters, we believe that Europe’s dominance in recent deal activity may be challenged by shifts in the relative levels of M&A on either side of the Atlantic.

From our client relationships we discern that the better prospects for US economic recovery compared to Europe are also being reflected in management attitudes. US deal-makers appear more upbeat than a year ago, the deal pipeline looks robust and we have encountered a definite attitude that US companies are now more prepared to “muscle their way out of the downturn.”

Part of this strategy is likely to involve increased M&A activity in pursuit of growth opportunities, particularly in the emerging markets of Asia, Africa, South America and Eastern Europe. Many US companies have been active in the last year optimizing their portfolios — both through divestments (such as P&G selling its Pur water business) and spin-off transactions (Kraft, Fortune Brands, Sara Lee and Ralcorp have all announced spin-offs).

We expect this activity to continue in the coming months.

Regional value comparisons, Q1 2009 to Q4 2011


Regional value comparisons, Q1 2009 to Q4 2011

Source: EY’s analysis of FactSet Mergerstat data.

The net effect of these factors driving deal activity may be that in 2012 the recent trend for Europe to dominate could be partly reversed in favor of the US.


 

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Consumer Products Deals Quarterly: Q4 2011

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