Merger and acquisition activity in the consumer staples sector almost halved by value in the third quarter of 2019, according to data compiled by S&P Global Market Intelligence.
Consumer staples companies accounted for $12.39 billion worth of deals in the three months ended Sept. 30, down 48.20% from $23.92 billion in the third quarter of 2018. In volume terms, 400 deals were recorded, compared to 420 deals in the year-ago period.
Year-to-date, $63.19 billion worth of mergers and acquisitions have been announced involving consumer staples companies, down 24.98% from $84.23 billion in the first nine months of 2018. This is despite the number of deals growing 7.09% this year to 1,345 from 1,256 deals a year prior.
M&A activity in the segment has been in decline in value terms since 2015, when the $116.12 billion megamerger of Anheuser-Busch InBev SA and SABMiller PLC created a global brewing giant.
Food producers dominated activity across the segment in value terms. Of the $12.39 billion total, food companies accounted for $8.11 billion, up 14.87% from $7.06 billion a year ago. By volume, activity was flat, with 169 deals recorded compared to 167 in the third quarter of 2018.
The sale of South African food and beverage producer Pioneer Foods to PepsiCo Inc. via its Simba Ltd. snack food unit was the largest deal of the quarter at $1.85 billion. Within the food products segment, it was followed by China Mengniu Dairy Co. Ltd.'s $1.03 billion purchase of infant formula and baby-food maker Bellamy's Australia Ltd. and the $1 billion acquisition of Quest Nutrition LLC by The Simply Good Foods Co.-owned nutrition bar and supplements manufacturer Atkins Nutritionals Holdings Inc.
Across the wider consumer staples sector, the personal products segment came in second to food producers in M&A activity. This was driven by Colgate-Palmolive Co.'s $1.71 billion purchase of French skin care company Laboratoires FILORGA Cosmétiques SAS during the quarter.
Deals involving makers of personal products jumped 378.72% year over year by value to $1.80 billion, further evidence of consumer goods companies' appetite for high-end beauty brands. In July, The Unilever Group completed its acquisition of Japanese-inspired skin care brand Tatcha LLC, which is based in San Francisco. Unilever did not disclose the size of the deal. In January, beauty-products maker L'Occitane International SA agreed to buy British brand Elemis Ltd. for $900 million.
M&A by food and staples retailers fell 71.04% year over year in value to $1.13 billion from $3.91 billion. A total of 62 deals were made in the third quarter of 2019, down from 68 last year.
Philippine-based Jollibee Foods Corp.'s $350 million takeover of Los Angeles-based International Coffee & Tea LLC, which does business as The Coffee Bean & Tea Leaf, was the biggest acquisition made by a food and staples retailer during the quarter. It was followed by Ebro Foods SA's purchase of basmati and specialty rice brand Tilda from The Hain Celestial Group Inc. for $342 million and Bon Preu SAU's sale of its remaining 50% stake to President and Managing Director Joan Font for $337.7 million.