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FMCG companies more cautious on M&As
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THE mergers and acquisitions size among the global top 50 fast moving consumer goods giants have fallen sharply to US$50 billion in 2016 from US$226 billion a year ago due to uncertainties in the global market, a latest study shows.
The decline in 2016 comes after a bumper year for M&A in 2015 and brings deal value to its lowest level since 2011, less than half the ten-year average, according to the joint report by OC&C Strategy Consultants and The Grocer, with political uncertainty across Europe and America likely to have depressed deal-making in the sector.
The global top 50 consumer companies saw their organic growth sliding to 2.6 percent from 3.4 percent a year ago while revenue growth also fell for the first time since the report starts compiling data 15 years ago.
Net profit was up 18.8 percent from 16.6 percent annual growth in the previous year although most of this was due to exceptional gains.
"Political uncertainty has undoubtedly played a significant part in this," commented Will Hayllar, a partner at OC&C Strategy Consultants.
In the first five months this year, ten deals have been announced with a combined value of US$87 billion thanks to a mild recovery across the sector as business adjust to new norms.
Consumer goods players have been seeking acquisition targets to leverage growth in niche categories and to consolidate existing operations as they've been under pressure to boost margins.
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