US consumer markets deals insights: Q1 2018

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Executive summary

After a record peak in Q4 2017, Consumer Markets deal activity declined in Q1 2018. Demographic factors and the impact of technology continued to drive companies to reassess their core businesses driving M&A in the sector, although at a slower pace than in 2017 due to continued market uncertainty around tax reform and uncertainties around the recent tariff announcements.  Both deal volume and value decreased in the sector during the quarter compared with Q4 2017 to $60.3 billion and 494 deals, respectively.

The largest transaction in Q1 2018 was the pending acquisition of Dr Pepper Snapple Group Inc. by Keurig Green Mountain (ultimately owned by JAB Holding Company) for $18.7 billion. There were four megadeals (transactions >$5.0 billion) announced this quarter totaling $39.8 billion or 66% of total deal value, a 3% decrease compared with last quarter.

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Increased competition is driving smaller strategic investments

  • Amazon has disrupted various subsectors through its strategy of combining technology and e-commerce aiding in the proliferation of virtual commerce (v-commerce) brands in order to cater to changing consumer tastes. M&A continues to be an attractive option for retailers, grocers and drugstore chains that are trying to keep up with the e-commerce boom and seek top-line growth.
  • While competition remains at an all-time high, companies have been cautious to make large investments as they strategize on the next key investment to pull ahead of their competition. Average deal size this quarter totaled $122 million, a 31% drop in comparison to last year and a 49% decline over the previous quarter.
  • The acquisition of Dr Pepper Snapple Group Inc. by Keurig Green Mountain Inc., a unit of Acorn Holdings and ultimately JAB Holding Company, for $18.7 billion was the largest megadeal announced in Q1 2018, accounting for for 31% of total deal value.
  • There were four megadeals announced this quarter totaling $39.8 billion. Megadeals represented 66% of total deal value.
  • There were 125 private equity deals announced in the quarter with 33 deals having disclosed values amounting to $23.4 billion.  This was a 65% increase in disclosed deal value compared with Q4 2017 and more than four times the total value of $5.7 billion reported a year ago, but still slightly below the peak reached in Q2 2017.

Contact us

John Potter
PwC | Partner | U.S. Deals Sector Leader
Tel: +1 (612) 596 4900
Email

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