Companies looking to grow — as well as find ways to stay relevant — might be jumping into the mergers and acquisitions game.That’s the conclusion of a report from global consultancy firm A.T. Kearney titled “2018 Consumer and Retail M&A Report: Can M&A Reignite Growth in Consumer and Retail?”The results in the report were based on interviews with c-level retail executives, with 75 percent stating that they are using M&A to help their companies “acquire new capabilities, expand their product portfolios, access new customers or increase their geographic reach,” A.T. Kearney said. Further, 71 percent of respondents said M&A is creating value, up from 48 percent a year ago.Bahige El-Rayes, an A.T. Kearney principal and a co-author of the report, said fueling M&A activity is the record amounts of cash reserves at both private equity firms and consumer products companies.While there are already record levels of cash held by private equity firms that need to be put to use, El-Rayes said the cash hoards at U.S. consumer goods firms also are expected to increase now that companies with international operations can repatriate funds to the U.S.“The repatriation of funds will put U.S. companies at an advantage because the surge in liquidity will allow them to fund new M&A activity. Second, with the lowering of the structure of the tax rate, that [will also result in] extra cash that can be used in new areas that include M&A,” he said.He expects more cross-border transactions, with “U.S. based firms expanding and buying assets abroad.” One reason is the new U.S. tax laws, which are expected to boost domestic valuations and in turn make acquisitions by foreign firms more expensive. On Monday, the U.S. Justice Department gave its nod to Bayer AG’s mega-deal to buy Monsanto Co. in a transaction valued at over $60 billion, provided the companies sell certain assets so as to not run afoul of antitrust issues. The deal, which would form the largest pesticides and seeds firm, is still awaiting approval from the European Union.El-Rayes believes that legacy companies looking at how to grow and survive will likely find their best opportunities in adjacent businesses. “Companies will be looking at industries they don’t play in,” he said, citing the planned acquisition of health insurer Aetna by drugstore retailer CVS as one example. Another is the General Mills acquisition of Blue Buffalo Pet Products. A third example is the $13.7 billion Amazon deal for Whole Foods, which the A.T. Kearney authors call a convergence deal because it blurs the line between the online and physical channels.For beauty firms, El-Rayes said mass firms, which are fighting for survival, will likely look to add a premium line as a way to offer differentiated product. Those specializing in makeup could find expansion opportunities in the area of skin care. For apparel retailers, expansion could come in the form of footwear, accessories or even beauty.According to El-Rayes, there’s a sense among the respondents at legacy companies that they need to move sooner than later to reignite growth because of the feeling that they have “one or two years left before they get disrupted.” And for those going after bigger companies to move the needle, there’s a general feeling that there are only so many opportunities left because of the number of deals that have already taken place. Those two thought patterns will push more and more companies to consider business adjacencies to complement existing businesses so they can form new value chains, the A.T. Kearney principal said.El-Rayes also expects corporate venture funds to shift gears from acquiring a start-up just to incubate for growth. That model doesn’t necessarily translate to growth for the legacy brands. The model that would work, he said, is for these corporate funds to buy start-ups that could teach legacy brands some new tricks that they could incorporate into the culture of the existing businesses, whether it is a new e-commerce platform or some form of digital and social media content.
Exclusive: @longchamp is planning to stage its first official runway show at New York Fashion Week this fall. The French leather goods firm has expanded into ready-to-wear as part of its repositioning as a lifestyle brand. The show, scheduled for September 8, will also cap the brand’s 70th anniversary celebration. Get all the details on WWD.com. #wwdnews #wwdfashion (📷: @dominiquemaitre)
The Duke and Duchess of Sussex undertook their first overseas engagement as a married couple in Dublin. The trip included multiple events and outfits changes, including this black dress by @emiliawickstead that Meghan Markle wore for a party at the British Ambassador’s home. #wwdfashion #royals
At 20 years old – and with an estimated net worth of $900 million - @kyliejenner is the youngest person to ever make @forbes’ annual list of America’s Richest #SelfMadeWomen. “It’s incredible to be recognized for something I’m so passionate about, and I’m really grateful for that. I’ve always loved makeup and worked really hard to bring the first lip kit to the market,” said Jenner on founding @kyliecosmetics. See who else is on the list on WWD.com. #wwdnews #wwdbeauty (📷: @rainerhosch)
“The collection is inspired by Tulum and the Mayan Riviera – its laid-back luxury, life of cabanas, untouched coastline, natural habitats, exotic cocktails and jungle parties with renowned DJs,” said Matteo Maniatty, creative director and cofounder of @descendantofthieves, on the brand’s inspiration for its latest collection. See more designer sketches and inspirations on WWD.com. #wwdfashion #nyfwmens #nyfw
@riccardotisci17 is releasing a limited-edition capsule collection as part of his anticipated runway debut for @burberry in September. Delivered in a series of instant drops, this is the second Burberry capsule collection announced since Friday, when Tisci broke the news on his collaboration with @viviennewestwood. Get all the details on WWD.com. #wwdfashion #wwdnews
“It’s like a Cinderella story. You get a little fake, you get a little real, you put it together and voilà,” said legendary rapper Slick Rick, who helped pioneer the merge of luxury and streetwear. WWD’s @ariahughes spoke to @therulernyc about his jewelry collection, his collaboration with @bally and how the industry has evolved – link in bio. (📷: @kristaschlueter)
@ragandbone and @eminem are teaming up on a special capsule collection of streetwear pieces. Sold at a one-day pop-up in London’s Soho on Friday, the collection features three different T-shirt designs and a hoodie. The capsule is set to kick off the rest of Eminem’s shows in his European Revival Tour, which ends on Sunday. Get all the details on WWD.com. #wwdfashion