A surge in fourth-quarter mergers and acquisitions helped lift the value of middle-market M&A activity in the retail, apparel, footwear and restaurant industries last year.
A study by investment bank R.W. Baird & Co. said the number of deals valued at less than $1 billion in the sectors declined to 91 last year, down 20.9 percent from the full-year total of 115 in 2008. However, propelled by activity in the range of $100 million to $499 million category during last year’s final quarter, the value of those deals grew 32.5 percent to $9.29 billion from $7.02 billion in 2008.
In tracking deal multiples, Baird found a market leaning heavily in favor of buyers as the 2009 total came in at 6.6, compared with 7.8 in 2008 and 9.8 in 2007. The value was the lowest in any of the 12 years studied by Baird, supplanting the 2003 multiple of 6.9. Baird defines the multiple as enterprise value — equity plus debt minus cash — divided by earnings before interest, taxes, depreciation and amortization.
The increase in the value of deals within the four industries was attributable entirely to activity in the fourth quarter amid signs of an economic recovery. In the final three months of 2009, the number of deals rose to 24 from 22 in the previous year, but their value more than doubled, rising 125.3 percent to $2.84 billion from $1.26 billion.
It was essentially the middle of the middle market that pulled the numbers up. There were no disclosed deals in the $100 million to $499 million range in the fourth quarter of 2008, while those in its 2009 counterpart numbered eight with an aggregate value of $2.1 billion. Among these were Sally Beauty’s acquisition of Sinelco International, Billabong International’s purchase of Swell Inc., Genesco Inc.’s deal for Sports Fan-Attic Inc., Iconix Brand Group Inc.’s purchase of a stake in Mark Ecko’s brand portfolio and Li & Fung’s Wear Me acquisition.
The uptick supports the forecast of Joseph Pellegrini, managing director of Baird’s consumer retail team. Pellegrini said he expected a continuation of the flight to value in M&A, similar to the one going on with shoppers seeking bargains.
“It will be a mantra,” he said, noting that acquirers will remain selective and focused on companies for which their back-room savvy can provide immediate operating benefits. He’s also upbeat about the opportunities for a company such as Iconix to take acquired brands and give them new life by adjusting their distribution into markets more receptive to them.
“The days of making acquisitions for the sake of making acquisitions — that’s not working anymore,” he said.
EXCLUSIVE: Two and half months after John Targon, cofounder and codesigner of Baja East, was hired as creative director of the contemporary division at Marc Jacobs, he has left the company, WWD has learned. Marc Jacobs International, which is owned by LVMH Moët Hennessy Louis Vuitton, confirmed Targon’s departure in a statement: “John Targon is a talented designer and we appreciate the work he has done here. Ultimately working together did not make sense for the brand and we wish him the best.” Read the story by @jessiredale, link in bio. #wwdnews
@theluxurycollection is officially launching a collection, tapping Sofia Sanchez de Betak for the capsule. Over 30 styles will be featured in the Chufy x The Luxury Collection, debuting next month at Bergdorf Goodman, The Webster, FiveStory and more. De Betak, known as “@chufy,” drew inspiration for the collection from her trips to Japan in the past year #wwdfashion
@lhd, founder and CEO of @thewebster, has teamed up with @lebonmarcherivegauche for the European launch of her ready-to-wear line, LHD. The launch will come with an exclusive pop-up opening today that’s set to run through May 20. Located on the second floor, it carries her debut Miami-themed resort collection, launched in November as see-now-buy-now. #wwdfashion
@longchamp, which marks its 70th anniversary this year, just opened its biggest U.S. store on Manhattan’s Fifth Avenue. On the lower level there’s a floor-to-ceiling display of the brand’s iconic Le Pliage bag – in all of its different colors, shapes and sizes. Customers can also have their product personalized in-store by imprinting names, initials or emblems. #wwdfashion (📷: @ericmtownsend)
“Whenever I’m in that place of sound and music, I don’t have fear or nervousness…This album has a lot of themes of courage and boldness and I want to be the soundtrack for people’s lives. I’ll be so happy if [my songs] evoke strength in people, which I know music has done for me,” says @kimbramusic of her newest album “Primal Heart.” The New Zealand-born singer sat down with WWD to talk about her music, newest tour and connecting with hear fans — read more on WWD.com #wwdeye (📷: @jilliansollazzo)
Luxury handbag resale company @rebagofficial is planning to sell a rare collectible for $70,000: the @hermes White Crocodile Himalayan Birkin. The exclusive Birkin sold for about $100,000 in 2008, when @davidbeckham bought one for his wife @victoriabeckham to add to her collection. Read more about the rare Birkin on WWD.com #wwdaccessories
With her costume pearl necklace and what-you-see-is-what-you-get style, Barbara Bush, who died Tuesday at age 92, was a straight-shooter from start to finish.
Born Barbara Pierce in New York City, Bush served as the 37th first lady, as well as the country’s second lady from 1981 to 1989. In addition to being part of the longest presidential marriage — 73 years — Bush also had the unlikely distinction of having one son, George W., become the 43rd president and another son, Jeb, run unsuccessfully in 2016. Having served as second lady during the Reagan administration’s two terms and lived all over the world during her own husband’s ascending political career, Barbara Bush made it clear that literacy — not fashion — was her priority. Read more from Rosemary Feitelberg’s obituary on the late First Lady in WWD.com, link in bio. #barbarabush #wwdnews
Western and ’90s trends have influenced denim for fall 2018. Think raw, dark and coated jeans mixed with bold prints and tough leather. #trendtuesdays #wwdfashion (Styled by @thealexbadia;📷: @ryanplett)