Retail M&A grows by 15%

A study by law firm RPC shows retail mergers and acquisitions have grown by 15% over the past year.

While the number of deals has risen, the value of those deals has dropped by 16% from the previous year’s total of £4.3bn, to £3.7bn. The value of those deals does not include the recently proposed merger between Sainsbury’s and Asda.

RPC corporate partner Karen Hendy said: “Through mergers such as Asda and Sainsbury’s, market leaders are looking beyond all the hype about the ‘meltdown of the high street’ and getting on with building breadth of offering and scale.”

The study found there have been 37 deals in the year up to 31 March, compared with 31 deals between 2016 and 2017.

Companies are favouring M&A over flotations, with selling up to a competitor seen as a safer way to obtain investment.

Hendy added: “It is important that sellers and creditors are sensible over the prices they are expecting from M&A deals in the current climate.”

The RPC study also showed the number of retailers entering insolvency has risen 7% in the last year, however it said there is still an interest in buying troubled retailers assets at a cut price.