Mergers and acquisitions activity has started to heat up after a few years of reduced activity in the consumer products industry, according to Deloitte. Global consumer products M&A transactions totaled $2.18 trillion in 2011, an increase of 2.5% from $2.13 trillion in 2010. While the M&A activity is strengthening, it still hasn’t returned to its all-time high of $2.40 trillion in 2008. Consumer products companies take part in M&A transactions for a variety of reasons: geographic expansion, expedited growth strategies, gaining supplementary market share to achieve a dominant position, and adding new resources and capabilities.
With the economic slowdown, many consumer products companies have turned to M&A activity to grow their businesses. Small consumer products firms are looking to merge with larger firms to protect their brand and relationships with retailers. Here are some exciting deals that have taken place in the last 12 months with world famous brands:
BED BATH & BEYOND INC.: With more than 1,000 home furnishing stores, Bed Bath & Beyond, Inc. has agreed to acquire Cost Plus Inc. for $495 million in May 2012 and gains control of the World Market and Cost Plus Imports chains. With Cost Plus annual revenue at $963.8 million in 2011, this places the valuation at about 0.51 times of revenue.
ASAHI GROUP: Japanese beer company Asahi Group is entering the milk beverage business through its agreement to acquire Calpis for 120 billion yen, or $1.5 billion, from the food and condiment group Ajinomoto in May 2012. Calpis’s most recent annual revenue is $107.4 billion yen. This places the valuation at 1.1 times revenue.
COCA-COLA FEMSA: In May 2012, Latin American bottler Coca-Cola FEMSA agreed to acquire the beverage division of Mexican group Grupo Fomento Queretano and plans to merge bottling operations following the transaction worth MXN6.6bn (US $478). The deal represents an EV/EBITDA multiple of approximately 9.7 times.
ACCO BRANDS CORPORATION: Office products giant ACCO Brands Corporation merged with MeadWestvaco’s Consumer & Office Products business in May 2012 and acquired rights to brands including Mead, Five Star, Trapper Keeper, AT-A-GLANCE, Cambridge and Day Runner.
NESTLÉ: Nestle has increased its stakehold on the infant-nutrition market and confirmed its place as the market leader. Nestle agreed to purchase Pfizer’s baby food business for an estimated $11.85 billion in April 2012. The Pfizer business is forecast to generate sales of $2.4 billion this year which yields a revenue multiple of 4.9 times.
MOLSON COORS: Molson Coors acquired Staropramen maker StarBev and its nine breweries in central and eastern Europe for a total purchase price of $3.5 billion in April 2012. The American brewer, Molson Coors, is looking to extend the distribution reach of key brands Miller Lite, Coors and Carling in central and eastern Europe. With StarBev’s sales at $1 billion in 2011, this places the valuation at about 3.5 times revenue.
KELLOGG COMPANY: The breakfast cereal global conglomerate, Kellogg, agreed to purchase the Pringles snack brand for $2.7 billion in February 2012. Annual sales for Pringles are about $1.5 billion, which places the valuation at an estimated 1.8 times revenue.
3M: Avery Dennison Corp. agreed to sell its Office and Consumer Products business to 3M in January 2012 for an estimated cash purchase price of $550 million. This Office and Consumer Products business includes the Avery and HI-LITERS and Marks-A-Lot brands in North America, several European countries and Australia and New Zealand. With sales in 2011 estimated at $765 million, this places the valuation at about 0.72 times of revenue.
SEALED AIR CORPORATION: Sealed Air Corporation purchased Diversey Holdings, Inc. in October 2011 for $4.7 billion in cash and stock. With Diversey’s 2010 net sales of $3.1 billion, this places the valuation at 1.5 times revenue.
BJ’S WHOLESALE CLUB INC.: The retail industry giant, BJ’s Wholesale Club Inc., based in Westborough, entered into an agreement to be acquired by Leonard Green & Partners LP and funds advised by CVC Capital Partners in June 2011. This cash transaction is valued at $2.8 billion. With BJ’s most recent quarterly revenue of $2.83 billion, this places the valuation of at 0.25 times revenue.