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Data: Bain & Company; Chart: Will Chase/Axios

Bain & Company crunched numbers as part of its Global M&A report and found that a steady, methodical approach to M&A by public companies translates into higher total shareholder return growth and stronger sales growth.

Compared, of course, to companies in their peer set who don't actively pursue consolidation. 

Why it matters: As I've outlined in this newsletter, the retail sector is on the mend from a post-pandemic growth standpoint but looking at the chart above, you can see that the fragmented retail sector is actually the lowest on Bain's list of frequent acquirers. 

Of note: Bain defines frequent acquirers as public companies that made greater than 10 acquisitions between 2011 and 2020. 

Details: According to Bain, companies that fit into its frequent acquirers' bucket saw their TSR grow 12.1%, or 1.5x greater than their infrequent acquirer peers. In terms of sales growth, 2.1x greater, Bain's data show.

"Companies that have a repeatable model of M&A show a TSR return and stronger sales growth than peers who have a more episodic approach to M&A," said David Harding, a Bain advisory partner. 

In terms of where retail fits into this picture, Harding noted that the industry has simply not shown a tendency for a steady approach to deals. 

"One of the riskiest things for a company is the big, one-off deals. Big deals are usually problematic," Harding added.

The bottom line: Taking Bain data a step further, a disciplined biz dev team or chief strategy officer with a long-term approach plays a larger role in returns than may be appreciated at some companies. 

Tomorrow, we'll take a closer look at companies that Bain groups in the frequent and infrequent categories.

1 big thing: M&A maniacs

Private equity firm Leonard Green is among the bidders for the Boots business auction, a source familiar with the matter tells me. 

Other current bidders include Bain Capital, CVC, KKR, Sycamore, and Asda's owners, TDR Capital and brothers Mohsin and Zuber Issa, the source says.

Catch up fast: Previous media reports did not mention Leonard Green but listed Advent, Bain Capital, CVC, KKR, Sycamore and TDR Capital as either likely bidders or studying bids. (Much earlier reports mentioned Apollo and CD&R but those names seem to have faded from view.) 

Several media reports said Bain and CVC were joint bidders but my source could not confirm that. 

Why it matters: Walgreens Boots Alliance came together through a series of mergers and now its separation is attracting intense interest from suitors who see more value in the business as a standalone.

The Boots pharmacy business is said to be worth around $9.6 billion.

What they're saying: The private equity firms mentioned here declined to comment or did not immediately respond to my request. 

Morry Smulevitz, Walgreens Boots' VP of corporate communications, referred me to last month's announcement of the strategic review.

"WBA has commenced a strategic review of our successful Boots business, including No7 Beauty Company, which is at an exploratory stage," Smulevitz said.

I asked him whether No7, which is sold in a number of retailers and is not a WBA brand, could be sold as a separate process, and he declined to comment.

My thought bubble: Separating No7 as its own sales process could get WBA more value from the overall review, with separate buyers willing to pay a premium. 

Reality check: Asda's owners pursuing the Boots business makes the most logical sense in terms of a strategic buyer but it would also attract the most regulatory heat. 

The bottom line: We're still in the early innings of this auction process.

2. The BFD: Leonard Green polishes its Boots deck 

Xpressbees, an Indian e-commerce logistics startup, raised $300m (including $200m in secondary) in Series F funding at a $1.2b valuation from Blackstone, TPG and ChrysCapital. http://axios.link/BVxl

Shiseido, the Japanese beauty group, is selling its professional hair care business to Henkel, the German-based personal care company. The unit generated 100m euros in 2020, according to the announcement. www.henkel.com

The Sage Group and Spayne Lindsay & Co., financial advisers in the consumer and retail spaces, are forming a global investment banking partnership focused on the consumer sector. http://axios.link/ORU9

3. Retail transactions

Zac Coughlin joins PVH, the parent of Calvin Klein and Tommy Hilfiger, as CFO effective April 4. He was previously CFO and COO of LVMH-owned DFS Group. Before that, he was CFO of Nike brand Converse. http://axios.link/UKJX

Sheila Shekar Pollak joins outdoor retailer Orvis as chief brand experience officer, effective Feb. 14. She was most recently CMO at Biossance, an eco-friendly skincare company. Prior to that, she was CMO at Athleta. www.orvis.com

Matthew Goldstein joins Authentic Brands Group as SVP of entertainment and special projects coinciding with the creation of two new divisions, Authentic Live branded experiences and Authentic Productions for content creation. www.authenticbrands.com

4. It's Personnel

In another Olympics dispatch from Reuters, we learn today that the games' mascot, Bing Dwen Dwen, is a red-hot consumer item inside the host country. 

What's happening: Fans and scalpers lined up overnight for the chance to buy up the latest batch of anything that looks like the mini panda bear. 

"Armed with foldable stools, self-heating adhesives and battery-operated hand warmers, hundreds of people braved the freezing temperatures outside a flagship store in Beijing's Wangfujing shopping area," Reuters reports. 

5. Winter Games mascot madness

Today we take a look at Part 1 of frequent buyers by sector,  courtesy of Bain (retail is in last place). We've also got an updated list of bidders for Walgreens' Boots business, and more Olympics consumer madness at the bottom. 

Situational awareness: Yum Brands, parent of Taco Bell, KFC and Pizza Hut, missed earnings but beat revenue estimates. Its stock is up this morning.

February 09, 2022

1 big thing: M&A maniacs