As part of KPMG International's Consumer & Retail M&A Outlook 2021: Revival beyond the precipice, we examine 14 geographies around the world and examine the market data, deal trends and overarching themes impacting the sector.
- M&A slowed down in 2020 after a good start in 1Q. Activity from Q2-Q3 was subdued due to the impact of COVID-19 and uncertainty over the macro-economic environment. There was a marked increase in activity towards the end of Q3, reflecting improved confidence, and delayed M&A processes recommencing for businesses that had traded well through COVID-19.
- Channel shift accelerated and E-commerce penetration increased from 22% to 35% of retail sales3, driving a 16% YoY increase in 2020 Internet and catalogue retailing deal volume (29). PE were key investors in the sub-sector as firms sought capital to drive growth.
441 deals (↓1% YoY)
US$14B (↑52% YoY)1
The following chart shows possible point deal activity was impacted by COVID-19 led restrictions.
2021 M&A Outlook
- Health and wellness to remain a key M&A theme, with companies looking at assets that can meet consumer health and wellness needs.
- Private Equity and Corporates are expected to keep pursuing digital transformation through inorganic growth, especially to improve e-commerce. In 2020, 61% of C&R transactions, up from 47% in 2019, had financial investors.
- Given COVID-19’s impact on accelerating channel shift, many businesses are looking at inorganic growth (acquisitions and partnerships) to drive DTC and e-commerce exposures. Nestlé acquired DTC player Mindful Chef4 and it is expected that DTC/e-commerce will drive a significant volume of transaction volume in 2021
- Global businesses such as Unilever are undergoing portfolio reviews and we expect non-core assets to be candidates for disposal5. PE houses hold significant undeployed capital and are attracted to complex carve-outs to create value.
- Companies are increasingly focused on ESG and this is expected to gain importance in investment decisions.
Despite the macro-economic trends, there are pockets of high growth in the sector and businesses are looking to raise capital. The investment environment in the sector is positive and we expect the rebound in activity to continue into 2021, with the long trends of health and wellness, e-commerce and sustainability being key attributes of the most-attractive businesses.
1 KPMG analysis, Thomson Deals, accessed on 5 Jan 2021
2 Press Report: Thai Central Group says buying Globus jointly with Austria's Signa for $1 billion
To view the Global C&R M&A Trends report or view other countries