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Retail industry M&A drops as economic factors weigh

MIchael Flaherty
Apr 1, 2022
A chart with downward arrows
Illustration: Annelise Capossela/Axios

First-quarter M&A data from Refinitiv is in, and it's showing a drop in overall volume and a slide in retail industry dealmaking across the board.

Why it matters: M&A activity is a sign of CEO confidence, and in the current climate, factoring in a tightening Fed, high volatility, and geopolitical turmoil, executive temerity is running low.

By the numbers: Worldwide M&A volume in the retail sector plunged 50% to $29.3 billion.

  • Food and beverage fell 61% to $7.5 billion, while e-commerce/B2B was down 72.4% to $2.9 billion.
  • Global dealmaking topped $1 trillion in the first quarter, our colleague Dan Primack writes, adding, Q1 was one of the most complex, challenging quarters ever for dealmakers.

Flashback: Axios shared the view of M&A bankers and lawyers from the Tulane confab last month, and the forward view was smaller is better in terms of dealmaking.

  • That is surely playing out in the retail sector, where small to midsized deals were the dominant example in Q1: The Aaron's Company to be bought by BrandsMart USA ($230 million); Mars to buy NomNomNow for $1 billion.

Yes, but: Several activist investors are pushing retailers to explore a sale of all or parts of the business, which would impact Q2 numbers if deals happen there (Kohl's, Bed Bath & Beyond; Hasbro, Big Lots).

The bottom line: Last year was a record for overall M&A. But the macro and micro (supply chain, worker shortages) climate is weighing heavy. Trees don't grow to the sky.

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