Consumer discretionary M&A activity drops 45.1% YOY in Q4'20

The decline in M&A activity in the consumer discretionary sector widened in value terms in the fourth quarter of 2020, according to data compiled by S&P Global Market Intelligence.

For the three months to Dec. 31, 2020, transaction value fell 45.1% year over year to $61.08 billion from $111.15 billion, versus a 4.7% decline in the third quarter.

The total number of transactions in the fourth quarter came in at 1,126, compared to 1,150 deals a year ago.

For 2020, M&A activity dropped 42.2% by value to $157.65 billion from $272.71 billion. The number of deals for the full year declined 18.8% to 3,667 from 4,527.

The largest deal in the fourth quarter was Inspire Brands Inc.'s purchase of Dunkin' Brands Group Inc. for $12.36 billion. As a result of the acquisition, Inspire Brands is now the second-largest U.S. restaurant operator with nearly 32,000 restaurants across more than 60 countries.

It was followed by Home Depot Inc.'s $10.32 billion purchase of HD Supply Holdings Inc. in November 2020. HD Supply provides maintenance, repair and operations products.

Three of the five biggest acquisitions in the fourth quarter were made by private equity firms. The biggest of which, and third-largest overall, was Warburg Pincus and TowerBrook Capital Partners' purchase of roadside recovery services provider AA PLC for $4 billion. The deal, which is expected to complete in the first quarter, was recently approved by the U.K. company's shareholders.

This was followed by Apollo Global Management Inc.'s acquisition of Great Canadian Gaming Corp. for $3.84 billion. The acquisition has received court and shareholder approval.

The fifth biggest transaction during the quarter was Parcom Capital and Mississippi Ventures' purchase of Dutch general merchandiser HEMA BV for $2.43 billion.

The hotel, restaurants and leisure subsector saw the most M&A activity by value despite a decline of 16.7% to $20.77 billion from $24.94 billion a year ago.

The subsector for trading companies and distributors was the second-most active segment in the fourth quarter at $10.33 billion. It was followed by the specialty retail sector, whose deal value dropped 69.8% year over year to $6.28 billion from $20.81 billion.