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Consumer Products Deals Quarterly, January-March 2011 - Sector focus: Tobacco bucks trends - EY - Global

Consumer Products Deals Quarterly, January-March 2011

Sector focus: Tobacco bucks trends

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Total disclosed food deal value was US$13.49b, a decrease of US$2.77b (17%) compared with the previous quarter.

The number of deals declined in all sectors in Q1 11 except tobacco, although in absolute terms the number of tobacco deals (six) remains very low. The food sector continues to dominate deal activity, despite a marked decline in deal volume in Q1 11.

Tobacco deals

After several quarters with virtually no activity, tobacco was the only sector in which the number of deals increased, rising from one deal in Q4 10 to six deals in Q1 11.

This is the highest number of tobacco deals since Q3 09, with a total disclosed transaction value of US$0.25b.

Danish privately owned tobacco group Chr. Augustinus Fabrikker A/S was the buyer in two of the deals, one of which, the US$205m purchase of US-based Lane Ltd., was the sector's largest disclosed deal in the quarter. The increased level of activity is unlikely to be the start of a trend, and we would expect deal activity to continue only sporadically because of the highly consolidated nature of the tobacco sector.

Number and value of tobacco deals Q1 08 to Q1 11

Source: EY's analysis of FactSet Mergerstat data from Q1 08 to Q1 11.

Food deals

The food sector continued to dominate consumer products deal activity in Q1 11, accounting for 62% of transaction volumes.

There were 154 food transactions in the period, a decline of 80 deals (34%), from the 234 deals announced in Q4 10. Total disclosed food deal value was US$13.49b, a decrease of US$2.77b (17%) compared with the previous quarter.

Source: EY's analysis of FactSet Mergerstat data from Q1 08 to Q1 11.


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