(London) – Squire Sanders has published its latest report on global M&A trends, Consumer and Retail 2013, produced in partnership with Mergermarket. The report charts and analyses M&A activity in those sectors worldwide in 2012-13, and features a spotlight on emerging markets and detailed Q&As on UK, Russia and China, with Squire Sanders’ experts.
Consumer and retail M&A activity has been boosted in the past year by corporates and private equity taking advantage of improved credit conditions and ongoing consolidation among struggling companies – some 1,797 transactions came to market across these sectors in 2012, worth a disclosed US$259.3bn – up in volume by 1% on 2011, but in value terms, by a hefty 37%.

Key findings of the report are:
• Large cap deals (over US$500m) were up in 2012 – 91 deals compared to 83 in 2011, representing 5% of all transactions; in Q1 2013 already there has been 5.2% of deals (19) over US$500m
• Among target regions North America retains its dominance – In deal value terms, since 2008 North America has increased its share of global consumer and retail M&A from 29% to 42%, while Western Europe has slipped from 41% to 18%
• Acquiring emerging markets (EM) assets has been a keen driver of global M&A – Acquisitions in EM reached a value high of US$96.9bn in 2012, up 38% on 2011, though deal volumes were slightly down
• Latin America is on the rise – In value terms the region’s M&A soared in 2012 up by 88% (on 2011) and its global share of M&A value has risen from 7% to 12%; Mexico in particular appears an increasingly attractive market
• Alongside China, Russia and India are becoming go-to markets – The BRICS economies have seen a slowdown but Russia has been a surprise performer; its GDP growth has dipped slightly in 2012 but its share of BRIC M&A in consumer and retail has shot up to 25% in 2012 (16% in 2011). India too, while its growth figures have been more disappointing, has had spectacular growth in M&A in this group, rising to 28% in 2012 (from 7% in 2011)
• EM businesses are becoming more noticeable as acquirers in the consumer and retail sectors, but still almost exclusively within emerging markets themselves (nearly 90% in 2012), where domestic or regional consolidation is the trend
• In the food & drink sector 72% of all deals (in value terms) had an emerging market target; in developed markets especially, the consumer trend for health and wellness products appear as key drivers behind food deals such as Nestlé’s US$11.9bn acquisition of Pfizer’s infant nutrition arm
• In the drinks sector, the beer segment is catching up on major consolidation with giants such as AB InBev, Molson Coors and Heineken making major acquisitions in Mexico, Czech Republic and Singapore; while in the spirits space Diageo has taken major stakes in companies in emerging markets of India and Brazil
• In retail, the total number of deals dipped slightly (555 in 2012, from 602 in 2011), but increased in value (to US$80,645m from US$74,902m, and the highest since 2008); however, the number of cross-border retail deals were up (from 41 in 2011 to 61 in 2012, and already totaling 39 in Q1 2013). Private equity has been a particular driver both in terms of exits and acquisitions in retail
William Downs, Global Practice Group Leader for Corporate and Corporate Finance at Squire Sanders, says: “Deal activity has been vigorous with notable company spinoffs, rebalancing of portfolios and continued focus on emerging markets or high growth sectors. Investment in emerging markets has been a challenge for some retail companies, particularly the global food retailers who have divested operations in countries such as Colombia, Indonesia, Malaysia, Japan, and scaled down operations in China’s competitive market. But food & drink M&A has been impressive. The pending Heinz takeover – promising to be a landmark consumer deal of 2013 – suggests US dealmaking is continuing its upward trajectory. It also points indirectly to the wider significance of emerging markets for consumer sector growth – Heinz has increased its emerging markets exposure significantly in recent years, from 9% in 2005 to 21% in 2012.”
Nick Allen, Squire Sanders’ Global Industry Group Leader for Media & Consumer Brands, adds: “The demand for retail companies particularly among private equity firms seems set to continue. In the UK the trend in particular has been on picking up struggling but iconic brands (such as Jaeger) or thriving low margin businesses (such as B&M and Iceland). In emerging markets retailers have to get it right, and quickly, where intense local competition comes from existing operators, who, as our report shows, continue to consolidate their positions.”
David Wack, Corporate Partner in Squire Sanders’ Moscow office, comments: “The report reveals the high levels of consumer sector M&A in Russia which in turn reflects the country’s particular growth in the past decade with a significant rise in domestic consumption. Penetration remains relatively low for key consumer goods and services, so there has been ample opportunity for outside investors who can find the Russian market one of the most profitable places for doing business. The area of e-commerce is one which has seen a lot of activity and is now opening up to external companies. In terms of food and drink I think we will continue to see much greater consolidation in the domestic market.”
“China stands in contrast to other Asia-Pacific countries such as the Philippines, Indonesia or Singapore, where consumer M&A activity in the past 12 months has been high,” says Dan Roules, Managing Partner of Squire Sanders’ Shanghai office. “Several important challenges face foreign consumer and retail companies as they look to expand in China – most deals are for minority stakes as historically there has been resistance to foreign ownership of important local brands; understanding and adapting to local conditions is also vital for success (the exit of DIY firm Home Depot in 2012 contrasts strongly with the growing success of Ikea); but above all there is the ongoing challenge of brand protection for consumer goods.”
Kasper Viio, global assistant editor at Mergermarket, adds: “It is fascinating to note how the proportion of emerging markets revenue is growing among the largest consumer sector companies. But while it’s fair to assume that M&A follows growth opportunities, the report also shows that it would be too simple to approach the flow of investments from a West to East perspective solely. Acquirers from BRICs towards Europe and North America will continue to show a steadily growing interest in M&A processes, both in consumer goods and retail, exemplified by the Weetabix and Valentino transactions.”

ENDS

The Green Investor Day, under the patronage of Borsa italiana London Stock Exchange Group and AIFI, aims at faciliting the matching of supply and demand for capital which coincides with the VedoGreen mission: the creation of a green financial market is essential for the support of private investments. The panel discussions during the day will illustrate equity stories of excellence in the green industry and shed light on the complex relationship between environmental issues and the financial markets.

Despite the economic uncertainties and regulatory constraints in Italy, Q1 2013 saw five deals in the renewable energy sector with a 54 million Euros deal value and four deals in the solar sector again with 54 million Euros deal value, according to Mergermarket. Between 2010 and Q1 2013, Italy alone had 27 renewable energy deals with a value of 2,304 million Euros, followed by the United Kingdom with only 8 deals and 928 million Euros in deal value.

The future growth in the renewable energy sector is expected to be driven by increasing pressure to reach EU renewable targets by 2020 and mounting demands on countries to invest in the sector, according to Mergermarket. The renewable energy sector is less affected by economic backdrops when compared to the wider energy sector. The proportion of renewable energy deals in the energy sector as a whole has witnessed a gradual increase every year since 2007 until last year where it was flat at 35% against 2011 (35.8%).

“The green energy sector continues to attract investors, aiming to the expected long term growth potentials,” said Laura Larghi, head of cleantech and renewable energy at Mergermarket. “In the short term, the difficulties to raise financing as well as the lack of clear legal framework in several European countries are slowing down investments and medium and long term plans. According to Larghi next to the large international groups, startup companies with innovative technologies and alternative business models continue to enter the sector.”

The top alternative energy deal in Italy in Q1 2013, according to Mergermarket, is Solar Holding (85% stake) with Mitsubishi Corporation and Innovation Networks in Japan as a bidder with a deal value of 41 million Euros.

The renewable energy sector in Italy is the one with the highest potential in Europe and a lot of panel discussions during the Green Investor Day will focus on that. In the morning, financial institutions, banks and investors will have the opportunity to meet with the top management of listed and private green companies that will illustrate business models and strategies for development; the afternoon is dedicated to the discussion between leading figures from the world of finance national and internationally, that will discuss important issues such as development potential of the sector, access to the necessary capital to finance innovation, M&A trends and new emerging markets.

For more information or interviews with Laura Larghi, please contact:

Flora Wilke
Head of PR, EMEA
The Mergermarket Group
Tel : +44 (0) 207 059 6348
Email : flora.wilke@mergermarket.com

While the world continues to grapple an economic crisis, Emerging Markets continue to grow and are leading the FDI recovery. AIM proves to be the right formula allowing the developing world to display their strengths and promote greater interaction and exchanges. The United Arab Emirates, a country with unprecedented and continuous growth, is the host of choice and initiator of this important event.

February’s ‘fortune-fortnight’ produced US$ 87.7bn -worth of mega-deals (deals above US10bn) towards global M&A so far this year – 124% higher than the US$ 70.7bn gained from mega-deals in Q1 last year, according to Mergermarket. The expected resurgence in M&A that these deals would produce hasn’t quite come to fruition – global M&A in 2013 to-date valued at US$ 496.7bn is down 12.7% compared to the US$ 569-worth of deals racked up in the same period of 2012. Deal volume is also behind last year at 22.6% from 3988 deals to 3085 deals so far this year.

The Americas M&A activity, mostly dominated by the US, is the only region to have witnessed year-on-year increases in deal value and also deal count from 2010 onwards.  Mergermarket expects US M&A to hold up this activity in 2013 as the country sees US$ 298.1bn-worth of deals announced so far this year, on par with the US$ 237.7bn accumulated in the same time last year.

CEE’s 2012 activity (US$ 127.6bn) was the third consecutive annual increase in deal value.  The region looks consistent with its progress in deal making this year too with Q1 showing increases in deal value every month – deals valued at US$ 28.3bn is up 61% compared to US$ 17.6bn during the same time in 2012. According to Mergermarket, two deals in particular have Influenced this total – the highest valued slots into Russia’s Mining sector where a 37.75% stake was acquired in gold mining company Polyus Gold International by two private investors in February for US$ 3.6bn. The second deal was in the most active global sector of Telecommunications – Tele2 Russia Telecom was acquired by Russian VTB Bank for US$ 3.6bn.

Following one of this year’s top global deals by value total deals for Africa are valued at US$ 14.9bn. This represents a 55.2% increase from the same time last year where deals totaled US$ 9.6bn.  The regions highest valued deal so far saw Eni East Africa was acquired by China National Petroleum for US$ 4.2bn.

Post-crisis global M&A has made an attempted recovery since the 2009 trough but values came at a standstill by the time we reached the end of 2012 (US$ 2,247.7bn) and ended at a similar level to how 2011 did (US$ 2,245.1bn).”  

During the course of the year we have seen several signals that M&A activity was back and appetite and excitement by investors and M&A professionals have has increased, says Giovanni Amodeo, Global Editor in Chief of Mergermarket. “However, the Eurozone crisis, the issues in Cyprus and the slowdown in the GDP growth in some of the emerging market has not helped the M&A volume to pick up.  The increase in cross border activity, as shown by Megermarket is a good indication that companies are still looking for good acquisition targets in different continents.”

For more information and/or interviews, please contact:

Flora Wilke
Head of PR, EMEA
The Mergermarket Group
Tel : +44 (0) 207 059 6348
Email : flora.wilke@mergermarket.com

Year-to-Date Overview

• Asia-Pacific has seen a total of US$ 21bn-worth of Energy, Mining and Utilities (EMU) deals since the beginning of the year, accounting for 24.3% of the total M&A transactions in the region
• The energy sub-sector recorded 32 deals worth US$ 13.7bn in Asia-Pacific from the start of the year, following the same projection of previous year and already 27.9% of the total Asia-Pacific energy M&A for all of 2012 (US$ 49.2bn, 147 deals)
• Mining acquisitions in the region totaled 23 deals worth US$ 6.8bn, while Utilities saw three transactions worth US$ 452m, accounting for 19.2% and 9% of the total amount last year, respectively
• China National Petroleum Corporation’s US$ 4.2bn investment into Eni Spa’s East Africa oil and gas exploration subsidiary was the largest EMU transaction so far in 2013
• Goldman Sachs and Bank of China International Holdings topped the Mergermarket Financial Advisors League Table for EMU in Asia-Pacific by value and number of deals, respectively
• The Legal Advisor League Table was led by King & Woods Mallesons after advising four of the top ten transactions in the sector, with a total mandate of eight deals worth US$ 9.2bn. Linklaters and Herbert Smith Freehills followed with second and third place, respectively

Dubai – 24 April, 2013 – Mergermarket, an independent mergers and acquisitions intelligence and data service, today hosts its second full-day Middle Eastern M&A forum in Dubai.

According to Mergermarket, the Energy, Mining & Utilities sector was the most active sector behind Technology, Media and Telecoms, accounting for a 27.5% share of the market by value. Inbound investment in Q1 2013 (US$ 15.1bn, 34 deals) was off to a better start than Q1 2012 (US$ 5.7bn, 40 deals) by deal value, up 167%. On the other hand, outbound deal value shrunk by 52.2% with deals valued at US$ 2.8bn (21 deals) in Q1 2013 compared to US$ 5.8 (39 deals) in Q1 2012.

Borys Dackiw, Baker & McKenzie’s managing partner for the Gulf region, says: “Over the past 12 months we have witnessed a healthy flow of cross-border M&A activity within the MENA region as well as some significant inbound and outbound FDI mandates and this looks set to continue through 2014. Coupled with a number of the region’s larger family owned businesses globalizing their operations, we believe the next 12 months could yet prove to be even busier in terms of M&A activity.”

Phil Gandier, MENA Head of Transaction Advisory Services, Ernst & Young, says: “The significant rise in total deal values when compared to last year indicates an increased level of confidence in the Middle East M&A markets and that there may be more promising quarters ahead. This should be spurred on by improved confidence in the global economy and the increasing ability of regional investors to factor in political instability around some areas of MENA to their deals and still get the deal done.”

Mergermarket revealed that Q1 2013 deals (US$ 18.5bn, 59 deals) dropped by only 5% compared with the previous quarter (US$ 19.5bn, 80 deals) and M&A activity in the region surpassed Q1 2012 levels (US$ 9.2bn, 87 deals) by 101.4%.

Ruth McKee, Mergermarket’s Middle East correspondent says: “Drivers for regional M&A for the remainder of 2013 will include private equity firms who are looking to exit investments and for some bolt-on acquisitions for portfolio companies, as well as from corporates who are looking to expand regionally and internationally.

Mergermarket data shows that private equity deals in the MENA region were at their highest level by deal value in 2012 since the peak in 2007 (US$ 5.2bn) – 17 deals valued at US$ 2.7bn was also the second year to see an increase by deal value.

In recent interviews with Mergermarket the CEO of Saudi drinks company Al Rabie said it is seeking dairy and beverage buys in Africa and Asia, and the CEO of Saudi’s gourmet food company Bateel said it seeks an investor ahead of a planned IPO. The MD of the UAE chemical distribution and trading company Petrochem Middle East said it is seeking acquisitions in the Middle East and North Africa region.

Also key will be continuing Gulf government infrastructure spending and some cross-border deals by sovereign wealth funds are expected.”

The Middle East M&A forum attracts 150+ M&A and private equity dealmakers, corporates, investment banks, senior-level executives, and those working in originating, structuring and executing deals in the Middle East.

The press release can also be seen in Arabic here.

For more information and/or interviews, please contact:

Flora Wilke
Head of PR, EMEA
Tel : +44 (0) 207 059 6348
Email : flora.wilke@mergermarket.com

Global:

• This year began with Q1 deal value (US$ 418bn, 2,621 deals) down 7.6% on the corresponding period in 2012 (US$ 452.2bn, 3,262 deals). It was the slowest opening quarter in ten years (Q1 2003, US$ 232.9bn)
• After the highest quarterly value in five years (Q4 2012, US$ 737bn, 3,561 deals), Q1 2013 saw a decrease in total M&A value of 43.3%. It is the seventh year in a row to see lower totals in Q1 than in the preceding Q4
• The year has already seen four mega-deals adding up to US$ 86.1bn. Last year’s mega-deals in the same period totalled US$ 70.7bn

 Europe:

• European M&A in Q1 2013 saw 1,037 deals worth US$ 116.3bn, a drop of 28.1% in value from the same period last year (US$ 161.7bn, 1,355 deals)
• Inbound investment in Q1 (US$ 47.3bn, 169 deals) was off to a better start than Q1 2012 (US$ 39.6bn, 230 deals) as was outbound investment.
• Outbound deals totalled US$ 27.2bn (165 deals) was 8.2% higher in value than Q1 2012 (US$ 25.1bn, 188 deals)

US:

• The US market looks optimistic amid the Dow Jones breaking records and mega-deals sparking hope for M&A resurgence. With a total value of US$ 172.4bn from 727 deals, Q1 surpassed the deal value for Q1 2012 (US$ 125bn, 922 deals), by 38%
• The quarter was 43.8% down by deal value compared to Q4 2012 (US$ 306.9bn, 1,103 deals), but this was the strongest quarter of 2012
• Outbound deals were slightly steadier in the first quarter of 2013 from Q4 2012 compared to inbound deals. Outbound deals were down 22.3% (Q4 2012 valued at US$ 64.5bn from 257 deals) whereas inbound cross-border transactions (US$ 15.4bn, 124 deals) were down 81%

Asia-Pacific (excl.Japan):

• M&A in Asia-Pacific (excl. Japan) got off to a slow start in 2013 with 453 deals worth US$ 64.5bn, 23% below the deal value seen in the same period of 2012 (US$ 83.8bn, 484 deals). Q1 for Asia-Pacific (excl. Japan) M&A was the slowest in four years since Q1 2009 (US$ 45.8bn)
• Inbound deals into Asia-Pacific were up from US$ 9.5bn (121 deals) in Q1 2012 to US$ 13.1bn (122 deals) in Q1 2013, but were down compared to US$ 17.6bn (135 deals) in the last quarter of 2012

London– The appetite for investments in projects, energy and infrastructure in Africa has not decreased despite the economic downturn. Iberian Lawyer brings over 80 experts from the banking, finance and legal sector at Chatham House, London, to discuss the current opportunities and challenges of investing in Angola and Mozambique.

The Forum is supported by leading law firms F. Castelo Branco, Cuatrecasas Gonçalves Pereira, Miranda, VdA and AVM, and focuses on the current developments and reforms in these countries.

According to KermaPartners’ latest research, the economic strength and growth in Africa makes the region a strategic target for many global law firms looking to expand their services.

Portugal and China may be the major foreign investors in Angola, but its expanding oil and gas sector continues to attract new interest. Meanwhile, efforts by the Government to diversify the economy are attracting a wider pool of international investment, according to the latest Iberian Lawyer Lusophone Africa Special Report.
Angola has been registering record growth. Ten years after the civil war, Angola’s economy is expanding at an annual rate of around eight percent. The Government is using its petrodollars to rebuild the country’s shattered infrastructure, expand the economy and modernise and better connect its cities. According to Mergermarket data, the first quarter of 2013 saw four deals worth US$4.5bn, compared to 11 transactions valued at US$8.63bn for the whole of 2012 and 12 deals for US$6.23bn in 2011.
“Relative to Angola, Mozambique may be further down the development track, but recent discoveries of huge offshore natural gas reserves hold the potential to change the economic direction of the country, says Giovanni Amodeo, global editor in chief at Mergermarket. “Mozambique recently introduced a new PPP Law that affects strongly in future investments.”
Based on Mergermarket M&A data, Mozambique has seen the largest transaction so far this year with the acquisition of a 28.57 percent stake in ENI East Africa by China National Petroleum Company for US$4.2bn. However, uncertainty has resulted from the implementation of capital gains tax, Rio Tinto’s large writedowns on the Benga mine acquisition and the major infrastructural spending required to ensure ‘route to market’ for players using the Sena line, and ports of Beira and Nacala.
Despite this, the experts predicts that as the nation’s gas boom and sheer geological potential are realised, growth in Mozambique’s domestic steel industry will continue to attract mine builders, producers, offtakers and others to partake in potentially large M&A transactions and joint ventures.

“Africa opens a wide range of business opportunities to international players in a whole host of sectors, but always under complex and over-regulated markets,” says Mari Cruz Taboada, Managing Director of Iberian Legal Group (Iberian Lawyer). “Being accompanied by experienced lawyers is essential when strategically developing projects and investing in markets such as Angola or Mozambique.”

Players from the Middle East, Canada and Western Europe are also trying to take advantage of opportunities in the region, following in the steps of the US, China, South Africa and Brazil.

For more information or interviews, please contact:

Flora Wilke
Head of PR, EMEA
The Mergermarket Group
Tel : +44 (0) 207 059 6348
Email : flora.wilke@mergermarket.com

- JPMorgan leads the financial advisor league table by deal value (US$ 124.2bn) for the first quarter since Q1 2011

- Morgan Stanley is most active in the global financial advisor league table by deal count having worked on 56 deals

- Four mega-deals in Q1 2013 pushed global deal value forward to US$ 405.9bn-worth of deals, 10.3% behind the same period last year

- Q1 2013 is the fourth quarter in a row to have an average deal size above US$ 300m

Discussion topics of the event will include:

• Is renewable energy policy weakening in European markets?
• The effects of industry consolidation on the European sector
• Renewable energy in growth markets
• Attracting institutional finance – the rise of direct lending
• What is the risk appetite among bank lenders and equity investors?

Despite ongoing micro-economic issues, the renewable sector continues to evolve. Increasing pressure to reach EU renewable targets by 2020 alongside mounting demands on countries to invest in the sector are both drivers of this growth and evolution according to Mergermarket.

“As 2020 approaches, the sector is expected to attract increasing investor interest as EU countries strive to meet set levels of renewable energy as laid out by the European Commission, ,” Laura Larghi head of cleantech and renewable energy in EMEA at Mergermarket said. “Large offshore wind parks in Germany and UK and solar projects in emerging markets will offer interesting opportunities both to traditional investors such as insurance companies, infrastructure and pension funds and to new players including industrial companies looking to be considered as a ‘green’ brand.”

Renewable energy is less affected by economic backdrops when compared to the wider energy sector. This is highlighted by Italy being the most active country by deal count in 2012 (23 deals) despite its political and economic uncertainties. This will be one aspect to be discussed at the forum. Since the proportion of renewable energy deals in the energy sector as a whole has witnessed a gradual increase every year since 2007 until last year where it was flat at 35% against 2011 (35.8%).

For more information or interviews, please contact:

Flora Wilke
Head of PR, EMEA
Tel : +44 (0) 207 059 6348
Email : flora.wilke@mergermarket.com

London/Düsseldorf – mergermarket, an independent mergers and acquisitions intelligence and data service, today hosts its latest German M&A and Private Equity Forum in Düsseldorf.

German dealmakers are confident of a rise in M&A deal volumes this year in a domestic market awash with cash. A dearth of targets means secondary transactions and corporate divestments will dominate and the mix of targets that come to market may be hard fought over.

A number of newly closed private equity funds active in Germany will all be looking to make new investments and these funds will need deals. Despite the availability of private equity capital in the market, financing and finding relevant targets will remain challenging.

Thomas Schulz, Partner at Noerr LLP, said” Despite fundraising concerns, private equity is very active and some funds team up on a case by case basis to drive down cost and mitigate risk. Venture capital is on the rise and more and more alternative providers of finance, such as insurance companies and pension funds drive deals. 2013 should be a good year for PE in Germany.”

Favourable financing conditions could see an increase in the number of private equity deals. German companies will appeal to global strategic and private equity buyers due to region’s perceived resilient economy.

mergermarket’s Head of Private Equity coverage, EMEA, Sarah Syed said “recovering markets have improved the availability of bank financing, which could see a flurry of sponsors bringing their portfolio companies to market. Assets bought in the boom times are coming to the end of traditional holding periods and sponsors will need to sell to return money to their institutional investors.”

The German M&A and Private Equity Forum attracts over 350 delegates from public and private companies, private equity, investment banking, financial and legal advisory.

For more information or interviews, please contact:

Flora Wilke
Head of PR, EMEA
Tel : +44 (0) 207 059 6348
Email : flora.wilke@mergermarket.com