Consumer Products Deals Quarterly: Q1 2015
A giant leap in food consolidation
Consumer products deal activity got off to an explosive start in 2015 with the announcement of the largest-ever transaction in the food sector at the end of the quarter.
Companies are seeking to create value and are pursuing mergers both to improve their bottom line by cutting costs and also to grow their top line in a low growth environment through portfolio optimization.
Consumer preferences are shifting toward more natural food products. Traditional manufacturers are responding by merging and bolstering their portfolios with healthier options. With sector valuations at all-time highs, share prices are arguably overvalued. However, deals funded with a blend of cash and stock are also part of the wider trend for creative deal structures.
Highlights of Q1 2015 consumer products deals
Total disclosed deal value jumped to US$62.5b in Q1 15 driven by the US$46.1b acquisition of Kraft by Heinz. The appetite for megadeals is expected to continue as consumer products groups address the challenges of brand, category and business unit portfolio optimization at the global level.
Total number of deals by volume in Q1 15 decreased by 36 deals, or 11%, to 301 deals compared with 337 deals in Q4 14. The drop was driven largely by lower activity in the food sector, where total deal volume decreased by 14% in Q1 15 compared with Q4 14. Despite the decline in the total number of food deals, the sub-sector dominated the leaderboard of largest deals. Of the top 10 deals, seven were food deals, two were household and personal care deals and one was a tobacco deal.
Top 10 deals in Q1 2015