The impending threat of US retail giant Amazon and other online retailers presents a challenge to traditional brick and mortar businesses, highlighting the importance of innovation through improved omni-channel retail experiences and differentiation of value proposition in order to remain competitive in this sector. M&A activity has remained strong in the Australian consumer sector with a reported 38 deals worth $2.1bn, contributing 11% of 2018 mid-market deals.
Although deal volume fell from 54 in 2017, the consumer sector retained its position as third most targeted mid-market sector in 2018. Dealmaking is expected to rise in 2019 driven by increasing competition and cost pressures. Price pressure from e-commerce and international retailers means many players are looking to inorganic options to maintain market share and preserve margins, while shareholders of distressed retailers continue to explore divestment options.
Additional M&A data trends show that:
Foreign interest continues in Food and Beverage Sector as Australia’s reputation for clean, safe and sustainable produce has continued to garner strong interest from foreign trade and financial buyers.
Private equity sees opportunity for strong returns partner with firms that showcase the ability to grow, innovate and differentiate their customer proposition.
Domestic health and wellness is one of the most active segments with trade acquisitions particularly prominent.