What is consolidating and fragmenting in consumer tastes
This dramatic rise in deal value comes as the number of megadeals remains fairly constant year to year, as Exhibit 1 shows.
What’s driving these souped-up deals, and what does it mean to companies in the sector?
Privatization has been behind the largest number of recent megadeals, accounting for about one-third of transactions and about one-third of deal value.
Privatizations can lead to many of the same types of cost cuts that are evident in consolidations.
So, take a stroll down memory lane to remember all of our past Word of the Year selections.
(RAI) sought a merger that could bolster its cigarette business, reduce costs through simplified operations and increased scale, and enhance shareholder value.
RAI found a potential mate in Lorillard, a rival with its own stable of popular cigarette brands, including the top-selling menthol brand, Newport.
Big, well-known brands and the companies that owned them have seen their market dominance erode as their businesses have seemingly been beset on all sides.
Large, established CPG companies have yet to find an effective answer to these challenges beyond cutting costs.
A review by Pw C of the 115 CPG megadeals (those valued at billion or more) that took place between January 2011 and October 14, 2016, found that of the 20 biggest, 16 exceeded billion; six exceeded billion.
Between January 2014 and October 2016, the average megadeal size more than tripled, from about billion to more than billion.