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Consumer staples M&A activity falls 48% YOY by value in Q3

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.

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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.

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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.

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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.