Overview: Consumer consolidation drives top end deals
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Consumer lead sectors in value in H1, followed by energy, mining & utilizes and pharma, medical & biotech; technology, media and telecommunications lead in volume
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Following a host of mega-deals, and with the US$13.5 billion megadeal between technology giant Amazon and high-end grocery chain Whole Foods recently grabbing headlines, the consumer sector delivered its highest half-year value figure on Mergermarket record. With 222 deals worth US$132.9 billion, consumer was also the most active sector by value during the period, followed by energy, mining & utilities and pharma, medical & biotech.
Consumer leads the way
Activity in the consumer sector has been boosted by a number of big-ticket transactions in the dining and food subsectors, with notable transactions including Reckitt Benckiser's US$17.8 billion purchase of baby formula producer Mead Johnson & Company in February, JAB Holdings' US$7.4 billion acquisition of bakery chain Panera Bread Company in April and Tyson Foods' US$4.1 billion acquisition of packaged sandwich supplier AdvancePierre Foods, also announced in April.
The highest-valued US deal across all sectors was British American Tobacco's US$60.7 billion acquisition of a majority stake in tobacco manufacturer Reynolds American.
In all of these deals, acquirers used M&A to consolidate in a competitive sector and break into new markets in order to find growth.
As sectors converge, non-tech companies realize that they will lose customers to tech companies encroaching on their space if they fail to stay abreast of technologybased opportunities.
Bill Choe, Partner, White & Case
Tech dominates volume
The technology, media and telecommunications sector delivered the most deals in H1 2017 (527), but only generated deal value of US$69.4 billion during the period—a 26 percent drop from the US$94 billion seen in H1 2016. Despite the fall in value, technology is now a major driver of deals across all sectors, as convergence between tech and non-tech sectors deepens—indeed, it is becoming difficult to categorize what is and what isn't a technology deal. Amazon's recent takeover of Whole Foods characterizes this trend of a tech firm entering previously unchartered territory to drive growth.
"As sectors converge, non-tech companies realize that they will lose customers to tech companies encroaching on their space if they fail to stay abreast of technology-based opportunities," says White & Case partner Bill Choe. "The best way for acquiring companies to integrate technology companies is to treat technology as a way of life, not as a separate "digital division" of the company."
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