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Consumer products deals quarterly, April - June 2011 - Tobacco makes a rare appearance in the top 10 deals - EY - Global

Consumer products deals quarterly, April - June 2011

Tobacco makes a rare appearance in the top 10 deals

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The food sector continued to dominate consumer products deal activity in Q2 11, accounting for 63% of transaction volumes.

Deal activity increased in the HPC and food sectors in Q2 11, while beverage deal volumes declined slightly. Tobacco activity was stable at the relatively low level of six deals.

Tobacco

The highly consolidated nature of the tobacco industry means that there are relatively few large deals that can still be concluded. BAT's purchase this quarter of Colombia's Protobaco was a one off opportunity for them to extend their strong presence in Latin America, made possible by PMI's failure to gain regulatory approval for its proposed takeover of the Colombian company (see Top 10 deals).

Looking ahead, sector M&A activity is likely to focus increasingly on bolt-on opportunities and adjacent businesses, such as alternative nicotine delivery systems.

Number and value of tobacco deals Q1 08 to Q2 11


Number and value of tobacco deals Q1 08 to Q2 11

Source: EY’s analysis of FactSet Mergerstat data from Q1 08 to Q2 11.

Food

The food sector continued to dominate consumer products deal activity in Q2 11, accounting for 63% of transaction volumes. There were 205 food transactions in the period, an increase of 33% from the 154 deals announced in Q1 11. Total disclosed food deal value was $9.3b, a decrease of $4.2b (31%) compared to the previous quarter.

Number and value of food deals Q1 08 to Q2 11


Number and value of food deals Q1 08 to Q2 11

Source: EY’s analysis of FactSet Mergerstat data from Q1 08 to Q2 11.

Beverage

Compared with Q1 11, the volume of beverage transactions in Q2 11 was relatively stable, falling by just two deals to 65 transactions Beverage transactions had a disclosed market value of $1.9b in the quarter, a decrease of $5.6b (74%) on the previous quarter. In Q1 there were three beverage deals in excess of $1b, however in Q2 the largest deal was only $780m.

Number and value of beverage deals Q1 08 to Q2 11


Number and value of beverage deals Q1 08 to Q2 11

Source: EY’s analysis of FactSet Mergerstat data from Q1 08 to Q2 11.

HPC

The number of HPC sector deals doubled in the second quarter, rising from 23 deals in Q1 11 to 47 in Q2 11. HPC disclosed transaction value, however, fell to $485m in the quarter, a decline of $727m (60%). The previous quarter contained one HPC deal in the top 10 with a value of $950m. There were no HPC deals in the top 10 in Q2 11 and the largest deal had a value of only $130m.

Number and value of HPC deals Q1 08 to Q2 11


Number and value of HPC deals Q1 08 to Q2 11

Source: EY’s analysis of FactSet Mergerstat data from Q1 08 to Q2 11.



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