Retail Mergers and Acquisitions Look Promising, Says Acuris

The total value of U.S. retail deals last year reached $36 billion — roughly three times the $13.9 billion of in 2019. This was despite the pandemic, or perhaps in part because of it

This growth came after year-over-year declines in both 2018 and 2019. This information comes from the M&A insights tool Mergermarket, a product of financial news and data company Acuris. However, that’s no the whole story for the retail sector’s 2020 because a deal is still considered as an acquisition no matter what sort of business a company is purchasing — a healthy one, or one out of bankruptcy.

The latter situation was the case for a number of retailers that the pandemic either were damaged or knocked out.

Brooks Brothers — Oldest Retail Company

ABG also purchased the company’s intellectual property and will oversee all licensing partnerships, new business, and brand development.

Brooks Brothers has more than 500 freestanding stores and shop-in-shops. It sells in department stores, specialty channels and outlets in 45 countries worldwide.

Retail JCPenney
Retail JCPenney

JCPenney

Wells Fargo said it would contribute an additional $2 billion in financing, and a group of JCPenney’s lenders will also take ownership of some stores and the company’s distribution centers.

Observers said that three separate bidders were competing to acquire JCPenney out of bankruptcy. They are private-equity firm Sycamore Partners, Saks Fifth Avenue owner Hudson’s Bay, and a joint bid of Simon and Brookfield.

Speedway and 7–11 to have 10,000 Retail Locations

7-Eleven currently operates about 10,000 stores in the U.S.. The added Speedway locations will bring the total to 14,000 locations.

“This acquisition is the largest in our company’s history and will allow us to continue to grow and diversify our presence in the U.S., particularly in the Midwest and East Coast,” said Joe DePinto, president and CEO of Dallas-based 7-Eleven. “By adding these quality locations to our portfolio, 7-Eleven will have the opportunity to bring convenience to more customers than ever before.”

Speedway has an annual pre-synergy run-rate EBITDA of approximately $1.5 billion prior to the acquisition. 7-Eleven said it expects to achieve $475 million to $575 million of run-rate synergies through the third year following closing. After the deal closes, 7–Eleven will be even better positioned to continue to pursue profitable growth opportunities, the retailer said.

Streamlining Will Drive M&A in 2021

Historically, as the retail industry grew more competitive, companies needed to consolidate to strength their positions.

Experts say that they think consolidation will increase in the latter half of 2021, after the pandemic interrupted a number of deals in 2020.

However, the purchase of distressed assets will probably remain a theme in 2021 after a booming 2020. But observers expect retail bankruptcies overall to decline.

The total M&A value in the retail sector reached $40.7 billion in the third quarter — the highest quarterly total since the second quarter of 2017. However, volume did not increase: there were 115 transactions recorded in the same quarter. While this number was higher than the 98 deals recorded in Q2, the Q3 total represents the second lowest quarterly volume since Q1 2009.

Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.

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