Cosmetics, Jewelry & Accessories Retailers M&A Outlook: If You ...

RetaileRs M&a OutlOOk: 2012
Overview and analysis of M&a
activity (January 2010–March 2012)
analysis by Deal Number and
Deal Value: Big Names Do
Count!
The fall in the average deal value of the
cosmetics, jewelry and accessories segment
was far more prominent than the fall
in total deal numbers. Average deal value
fell from a peak of $254mn in 2007 to a low
of $26.8mn in 2009, mirroring the impact
of the economic recession. There were 93
closed transactions in 2009, compared with
130 the year before. However, both the
deal value and number of deals recovered
in the subsequent years as the conditions
became more favorable for deal-making
(Figure 1).
Strategic choices
“Building capabilities, whether in the
‘soft’ or ‘hard’ segments, remains a strategic
choice for a company. However,
diversifi cation into new areas, which
you do not really master, can be risky
as consumers prefer to buy a brand’s
best known products rather than items
outside their main brand heritage.”
Lutz Becker
Retail Specialist
M&A International Inc.,
Germany
140
120
100
Major transactions during the review period
include the acquisition of Tommy Hilfi ger B.V.
by US-based Phillips-Van Heusen (PVH) for
$3.5bn in Q2 2010. The deal represented
the largest of its kind following the general
upturn in the economy until French luxury
goods company LVMH Moët Hennessy
Louis Vuitton (LVMH) bought watchmaker
and jeweler Bulgari S.p.A. in mid-2011 for
$5.2bn, doubling its watch and jewelry segment
sales (key brands: TAG Heuer and de
Beers) in yet another landmark transaction
for the sector. LVMH, traditionally a major
M&A International Inc. - the world’s leading M&A alliance
No. of Deals
No. of Deals
Figure 1: Cosmetics, jewelry and accessories segment – 2007–2011
80
60
40
20
0
100
80
60
40
20
0
124
254.0
130
72.1
92
26.8
93
142.1
103
163.4
2007 2008 2009 2010 2011
Total T Deals
Average A Deal Value V
Figure 2: Analysis by segment – January 2010–March 2012
88
63
Accessories Gems,
Jewelry &
Watches
46
20
Diversified Luggage
& Handbags
300
250
200
150
100
1
acquiror, owns several major luxury brands
including Louis Vuitton, Donna Karan and
Moët & Chandon.
analysis of M&a activity by
segment type
Out of 217 closed transactions1 , the accessories
segment accounted for the largest
share at 40.5% followed by gems, jewelry
and watches (Figure 2). Accessory demand
50
0
$mn
Source: Copal Analysis and Capital IQ
Source: Copal Analysis and Capital IQ
1 Our analysis is based on 217 closed deals during January 2010–March 2012. The deal coverage includes: accessories (primary), luggage and handbags (primary),
jewelry, timepieces and gemstone products (primary).
4