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Peugeot-Fiat Chrysler deal drives consumer discretionary M&A activity in Q4'19

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Peugeot-Fiat Chrysler deal drives consumer discretionary M&A activity in Q4'19

Total M&A consumer discretionary activity in the fourth quarter of 2019 jumped 78.8% year over year by value despite a decline in the number of deals, according to data compiled by S&P Global Market Intelligence.

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M&A activity increased to $110.99 billion in value terms from $62.08 billion in the fourth quarter of 2018, while the number of deals decreased to 1,141 from 1,214 in the year-ago period.

For the full year, dealmaking rose 8.7% year over year in value to $276.73 billion from $254.60 billion. The total number of transactions climbed to 4,672 in 2019 from 4,611 in 2018, reversing the trend of several years of consecutive declines.

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The largest deal for the three months and the year to Dec. 31, 2019, was Peugeot SA and Fiat Chrysler Automobiles NV's merger, valued at $45.04 billion. The combination of the French carmaker with its Italian-American counterpart is expected to form the third-largest auto company by revenue.

This was followed by LVMH Moët Hennessy - Louis Vuitton SE's acquisition of New York-based jeweler Tiffany & Co., which will expand the French company's presence in the watches and jewelry category. LVMH in November 2019 raised its initial offer of $120 per share to $135 per share, equating to a transaction value of $18.60 billion.

The third-largest acquisition was Flutter Entertainment PLC's purchase of Canadian online gaming company The Stars Group Inc. The deal, expected to create the world's largest online betting operator, was valued at €11.7 billion.

The fourth-biggest deal of the quarter was Viagogo Entertainment Inc.'s acquisition of fellow online ticketing marketplace StubHub Inc. from eBay Inc. for $4.05 billion. The sale comes after eBay conducted a review of its operations following talks with activist investors Elliott Management Corp. and Starboard Value LP.

Rounding out the top five largest M&A transactions for the three months is Isuzu Motors Ltd.'s agreement to purchase AB Volvo-owned UD Trucks Corp. for an enterprise value of ¥250 billion. The deal is expected to close by the end of 2020.

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The automobiles segment was responsible for the biggest portion of M&A activity by value in the fourth quarter of 2019 at $45.57 billion, primarily driven by the Peugeot-Fiat Chrysler deal. It was followed by the hotels, restaurants and leisure segment at $23.39 billion, up 37.4% year over year, while the specialty retail sector saw a jump of more than 600% in value to $21.51 billion. M&A activity in the auto components industry was the fourth-largest in the quarter despite a 72% decline to $5.64 billion. It was followed by the e-commerce segment, which reached $4.16 billion.

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In 2018, the auto components industry had the largest share of M&A activity in value terms in the fourth quarter at $20.60 billion, followed by the hotels, restaurants and leisure industry at $17.02 billion. The e-commerce sector came in third at $4.11 billion, closely followed by the diversified consumer services industry at $3.28 billion and the specialty retail sector at $3.19 billion.