2024 Mid-Year Outlook

Global M&A Trends in Consumer Markets

Global M&A Trends in Consumer Markets hero image
  • Insight
  • 8 minute read
  • June 25, 2024

M&A activity is expected to pick up in consumer markets, but timing remains uncertain and investors are being cautious in choosing which deals to pursue.

Hervé Roesch

Hervé Roesch

Global Consumer Markets Deals Leader, Partner, PwC United Kingdom

Dealmaking in consumer markets is expected to improve in the second half of the year, after a challenging two plus years during which deal volumes and values trended well below historical norms. In the first half of 2024, deal volumes declined by a further 22% from an already low level in the same period the prior year due to the current macroeconomic environment. Deal values were also 4% lower than the prior period in 2023, with a handful of very large deals supporting overall values.

EV/EBITDA deal multiples in the business-to-consumer sector in Europe and North America increased from a low-point of 8.4 in 2023 to 8.8 in the first quarter of 2024, according to Pitchbook data. Together with an increase in larger deals, some recent IPO activity, and the first interest rate cuts from the European Central Bank as well as certain other countries, market conditions point to a recovery in investors’ confidence in the sector.

A key theme of the past few years continues; consumer companies will keep reviewing their portfolios, and we expect that the pressure to focus on core, faster-growing markets will drive carve outs and portfolio reconfigurations. Notable recent examples include Unilever’s planned separation of its ice cream business, Sanofi’s planned separation of its consumer healthcare business, and the establishment of a ten-year partnership between Tesco and Barclays to provide financial services offerings to consumers.

M&A hot spots

PwC’s Voice of the Consumer Survey 2024, published in May, found that 64% of respondents cited inflation among their top three concerns. The reduction in purchasing power is affecting consumer spending habits, which in turn is influencing the areas that are most attractive from a growth and investment perspective. As such, we expect the following subsectors to be M&A hot spots in the coming months:

Consumer focus on ‘good for you’ products and services will continue to drive interest in consumer health and specialised nutrition businesses. For example, in the US, The Simply Good Foods Company announced plans to acquire protein shake brand Only What You Need for $280m. KKR’s proposed acquisition of optical platform Nexeye in the Netherlands has confirmed the interest of private equity (PE) in the sector, while pure-play dermatology company Galderma’s IPO has marked a successful PE exit.

We also expect more businesses in the vitamin, minerals and supplements (VMS) and broader consumer health sectors to come to market in the second half of 2024.

As anticipated at the beginning of 2024, deal activity has picked up in the hospitality, travel and leisure subsector as consumers prioritise spend on holiday travel and experiences.

In the travel sector, American Express Global Business Travel Group has agreed to acquire CWT Holdings, a provider of global business travel and meetings solutions, for an estimated $570m. Investors are expected to show particular interest in international travel opportunities. We anticipate additional travel agencies and technology assets that support travel sector operations to come to market in the second half of the year.

In the entertainment sector, the first half of the year has seen significant transactions in gaming and sports. For instance, International Game Technology has announced plans to merge its Global Gaming and PlayDigital businesses with Everi and a group of investors has acquired the Baltimore Orioles Major League Baseball team for $1.7bn. We expect a number of transactions that are in the pipeline for the gaming and broader entertainment sector to come through in the second half of the year.

The sector is structurally affected by environmental, social and governance (ESG) concerns, creating significant need for investment in new capabilities. This is driving mostly corporate-led consolidation activities. Assets that are well-positioned from an ESG perspective are also likely to attract interest from a wider range of investors.

The first half of 2024 has seen some notable deals in the packaging sector—for example, International Paper’s all-shares offer to acquire UK packaging firm DS Smith Plc for $9.9bn, which was agreed in April 2024, and Clearwater Paper Corporation’s acquisition of a large US-based paperboard manufacturing facility from Graphic Packaging International, which closed in May 2024.

With energy and commodity markets stabilising, we expect M&A activity in the packaging sector to pick up in the coming months.

Large FMCG companies continue to review their portfolios. A recent notable example is Unilever’s announcement to separate its ice cream business.

Pet-related products and services continue to draw investors’ interest, highlighted by Denmark-based BHJ AS’s planned acquisition of Cool Off, an Australian pet food business.

We are also seeing ongoing M&A activity in food staples and out-of-home consumption and the extended value chain. This includes ingredients, contract manufacturing and related agro-businesses.

“Still reeling from the last few years’ volatility and squeeze on purchasing power, consumers are cautious and selective on how they spend their money. We expect investors to be no different—but the market for opportunities is opening up.”

Hervé Roesch,Global Consumer Markets Deals Leader, Partner, PwC UK

Key M&A themes for consumer markets in the second half of 2024

In addition to portfolio optimisation, we expect the following themes will influence M&A activity during the remainder of 2024:

  • IPOs and take-privates

Although PE exit volumes are slow, consumer markets—specifically the beauty sector—have seen some notable IPO activity. Spain’s Puig, Germany’s Douglas, and Switzerland’s Galderma all went public during the first half of 2024, signalling institutional investors’ appetite for such assets.

We can still see opportunities in some public markets for take-private transactions, such as the planned delisting of a beauty player in Asia.

  • Consolidation and adjacent acquisitions

We expect that large consumer operators, especially in the retail sector, will use M&A to build efficiency and resilience in their operations and gain access to a larger share of consumer wallets. Some will address the challenges through consolidation, such as the merger of Brazil’s fashion retail chains Arezzo&Co and Grupo Soma, which will achieve greater scale by bringing together more than 2,000 company-owned and franchised stores and 34 brands. Others will look to diversify into new markets or adjacent categories. For example, in February 2024 Walmart agreed to acquire VIZIO Holding Corp., a manufacturer of audio and video equipment, for $2.5bn, to capitalise on Walmart’s access to consumers in a new revenue stream. And in June 2024, The Home Depot acquired SRS Distribution, a residential specialty trade distribution company, for $18.3bn, with a view to accelerate growth with professional customers.

  • Distressed M&A

The difficulties confronting the retail sector are evident from the rise in retail insolvencies during 2023 and the first half of 2024. The recent restructuring of The Body Shop exemplifies how these challenges, including the growth of e-commerce and shifts in consumer preferences, are impacting retailers across the board—from the very large and well known brands to small and medium-sized businesses. We expect this trend in distressed M&A will continue, driving some level of consolidation in the sector as the more financially stable companies look to scoop up brands, intellectual property and selected assets.

M&A outlook for consumer markets in the second half of 2024

We believe that the pressure to transform through M&A to meet rapidly evolving consumer needs remains as high as ever. As a result, we expect dealmakers will focus on transformation and deal readiness in the near-term, with dealmaking activity gathering pace over the next 6 to 12 months once overall market conditions ease and trading performance improves.

Our commentary on M&A trends is based on data from industry-recognised sources and our own independent research. Data on M&A multiples are for Europe and North America as of 31 March 2024, based on data from Pitchbook published on 23 April 2024. Deal volumes and values referenced in this publication are based on officially announced transactions, excluding rumoured and withdrawn transactions, as provided by the London Stock Exchange Group (LSEG) as of 30 June 2024 and as accessed on 3 July 2024. Certain adjustments to source data have been made to align with PwC’s industry mapping. All dollar amounts are in US dollars.

Hervé Roesch is PwC’s global consumer markets deals leader. He is a partner with PwC UK. Elena Girlich is a senior manager with PwC Germany.

The authors would like to thank the following colleagues for their contributions: Renier van Aswegen, Dominik Baumeister, Mide Coker, Sabine Durand-Hayes, Anne-Lise Glauser, Lisa Hooker, Zelf Hussain, Rick Jones, Neil Sutton, Jacqueline Windsor and Christian Wulff.

Explore our local M&A Trends in Consumer Markets from the following countries or regions:

Want to know the M&A trends we expected we expected in Consumer Markets at the beginning of 2024?

Read our 2024 Outlook