M&A TrendsRetail & Consumerin France - 2016

The show must go on

Deal flow remains strong with Food the most active segment.

2

2016 remains strong with deal volume and value on par with 2015

3

Deal volume and value comparable with 2015 albeit with a strong H1 of the year and a slowdown in H2

As the second semester came to a close, it was clear that the 2016 M&A activity remained buoyant in the Retail & Consumer sector, with some significant strategic moves by a number of French players.

Among those who dared: the merger of FNAC and Darty, to create France’s largest electronics retailer; the acquisition of MOM by Fromageries Bel to position the group in the fast growing healthy snacks

segment; and SEB group’s take over of the German group WMF which, with its €1.1bn additional sales, will strengthen the group’s market position, portfolio of brands and should generate significant synergies.

This report seeks to draw the trends emanating from the transactions which took place in the R&C sector in 2016, and involving one or more French parties (as Target and / or Acquirer*). We identified 307 transactions that form the basis of the analysis presented in this report. Deal value was publically available for 99 of these transactions.

Top 10 Retail & Consumer deals involving French players – 2016

Period Target Country Activity Acquiror Country Type Deal size

(€m)

Revenues

(€m)

H1 BIG C THAILAND* FR Hypermarkets TCC – CASINO Group TH Corporate 3 100 3 400

H1 DARTY FR Electrical products retailer FNAC FR Corporate 1 160 3 657

H2 IT COSMETICS US Premium makeup brand L'OREAL FRCorporate

(100%)1 130 182

H1 WMF GEProfessionnal coffee machines

manufacturerSEB FR Corporate 1 020

1

060

H1 BIG C VIETNAM* FR Hypermarkets CENTRAL- CASINO Group TH Corporate 920 586

H2 BUT FRElectrical appliance & furniture

retailer

CLAYTON DUBILIER & RICE /

LUTZ FAMILYUS/AT

PE (50:50

partnership)780 1 500

H1PROSOL GESTION

(GRAND FRAIS)FR Fresh products retailer

FIVE ARROWS / SIPAREX /

ABÉNEX CAPITAL / SAGARDFR PE 700 1 000

H1 GROUPE SMCP FRDesigning, manufacturing and

distribution of fashion apparelSHANDONG RUYI GROUP CN

Corporate

(Majority)> 650 -

H2 RIMOWA GE

Manufacturer of premium

travel and carry-on luggage

made of aluminum and

polycarbonate materials

LVMH FRCorporate

(80%)640 400

H2MATERNE MONT

BLANCFR

Natural fruit snacks and dairy

productsFROMAGERIES BEL FR

Corporate

(65%)553 362

* deals involving a foreign buyer investing in an international asset disposed of by a French player are excluded from the analysis. The only exception in this document consists in Casino’s disposals of Big C Thailand and Big C Vietnam, strategic moves in 2016 that will be remembered because of their size.

20,6

26,7

34,3

22,4

13,1 12,8

17,7

13,4 13,6

18,115,6 15,0

0

200

400

600

800

0

5

10

15

20

25

30

35

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Volume (#)Value (€bn)

Largest deals driven by French players grabbing international opportunities

4

The largest deals in value were driven by French players acquiring international assets

Half of 2016 R&C M&A transactions were domestic and involved a French party on both sell side and buy side (average deal value at €85m). The rest i.e. cross border deals involved a balanced mix of foreign players buying French assets (average deal value of c.€200m), and French corporates taking control of international players (average deal value of c.€300m).

Market share expansion, product and country diversification as well as portfolio strategy have paved the way for deal making, in addition to traditional de-leveraging constraints. 31% of the deals were recorded in the food sector, still in deep

reorganization, 22% in the clothing sector under the pressure of the depressed domestic demand & 16% in other specialized retail.

Amongst the deals analyzed, 13 transactions exceeded €500m, of which eight recorded in H1, still benefiting from strong optimism that followed the buoyant 2015 M&A activity (cf. PwC 2015 Overview).

2017, despite the electoral context, is promising to display memorable moves in the sector, in particular a few large deals by French players looking to secure market share in the USA have already been announced, such as the acquisition of WhiteWave by Danone, estimated at $12.5bn, L’Oréal’s acquisition of Valeant (valued at $1.3bn) or Bonduelle’s strategic takeover of Ready Pac Foods (sales of c.$800m).

Food (agro, transformation, retail)

96

Clothing

68

Home Goods & Appliances

50

Wine & Spirits

23

Personal Care & Cosmetics

32

Specialist Retailers & Other

38

Deal volume in 2016 by sub-sector:

Domestic deals (French target,

French acquirer)

€85m

Average deal value*

€200m€300m

Inbound deals (international players

acquiring French targets)

Outbound deals (French players

acquiring foreign targets)

*sample of 77 transactions for which deal value was publically available

FoodFrench players pursue the milky way

5

Large dairy players strengthen their global presence with a focus on emerging markets

Lactalis pursued its international expansion, after an already dynamic 2015 year (with acquisitions of AK Gida in Turkey, Nutrifont Alimentos in Brazil & Kuntej), in 2016 it continued to strengthen its position in emerging markets with the acquisition of Anik Industries in India for €62m as well as Sante, one of the market leaders in milk and dairy products in Georgia during H1. Lactalis continued its acquisition crave in H2 with the takeover of Albalact in Rumania. This deal will not only allow the French group to reinforce its position in the region, but also move ahead of Danone - its main competitor - by controlling a quarter of the Rumanian dairy market.

Meanwhile, Lactalis did not ignore its domestic market: the Group reinforced its cheese assortment and became France’s leader in Camembert AOP as well as in Livarot and Pont-L’Evêque, with the acquisition of Fromagerie E. Graindorge. What a feast!

In a similar manner, Danone expanded its presence in emerging markets with the acquisition of an additional stake (up to 92,5%) in Unimilk, the Russian brand. The deal, sealed for €1.3bn, wasn’t the only one for the group in 2016. With the acquisition of Halayeb, in Egypt, Danone pursued the expansion strategy in Africa it initiated with the creation of an Africa Division in 2014 (acquisitions sealed in Algeria, Ghana, Kenya and Morocco). Danone complemented its product portfolio during H2 2016 with a 40% stake in Michel & Augustin. This was the opportunity for the group to present DanoneManifesto Ventures, its internal investment and incubation fund.

More to come? Yes, Danone announced the WhiteWave acquisition project in 2017, Leader of the bio and vegetal milk in the USA.

Meat players flex their muscles to counter strong competition from the rest of Europe

Will 2017 be Arterris’s lucky year following its reinforcement in the chaotic meat segment in France? The French cooperative announced in December 2016 the triple acquisition of DufourSisteron (€38m revenues), Ovimpex (€250m) and Ovimpex Distribution (€40m), three flagships of the ovine and bovine sector. The cooperative now holds 15% of the French sheep market. Earlier in the year, Arterris also sealed the acquisition of Synergie Bétail Viande Coopérative with hopes of restructuring the sector and gaining bargaining power towards retailers. Will this strategy be its golden ticket?

With over 42% of the poultry consumed in France being imported, LDC sought to win back domestic market share and operational synergies through the acquisition of Agrial’s poultry activity. LDC gained further strength by securing the supply for both KFC and McDonald’s French entities in 2016.

FoodInsatiable appetite for scale

6

Multibrand FMCG groups strengthen and diversify their portfolio around the snacking trend

Following on the acquisition of Salés Sucrés in 2015, Labeyrie expanded in the snacking market by sealing a deal with its northern neighbors King Cuisine (Netherlands) and Père Olive (Belgium).

Further South, French Celnat was acquired by Ebro Foods for €26m, also known for its brands Panzani and Lustucru. This acquisition should allow the Spanish group to build its presence in the healthy snacking segment, initiated with the group’s acquisition of Roland Monterrat in 2015.

This segment also attracted Fromageries Belwhich acquired 65% of Materne Mont Blanc (MOM) for €553m. This was undoubtedly one of 2016’s most prominent deals. Together, the duo should represent a major global player, with a strong appetite to win over new consumers in the wider segment of healthy snacking.

After its merger with Eurial, which allowed Agrialto give birth to the second largest dairy group in France, the cooperative further strengthened its national presence through the acquisition of Fromagerie Guilloteau (which includes its well known brand “Pavé d’Affinois”), and reinforces its positioning in the high value-added products segment.

Brand portfolio rationalization for large FMCG groups was a source of opportunities for private equity companies such as the acquisition of Mondelez confectionary activities acquired by Eurazeo with deal completion expected in May 2017. This trend should continue in 2017.

Large food retailers strengthen theirdomestic / European market presence

Under shareholders’ pressure and in particular Muddy Waters activist hedge fund, Casino topped the M&A league table by recording a number of large divestiture operations to deleverage the Group with the disposal of its remaining stakes in Big C Thailand – sold to the country’s

hypermarket leader TCC for more than €3bn, and in Big C Vietnam to sold to Central, hence finalizing the group’s exit strategy from Asia. At the same time the Group was able to strengthen its domestic presence by completing the acquisition of Leader Price’s remaining 50% stake.

European food retailers were also active, with Metro Cash & Carry’s acquisition of Pro à Pro, the French B2B arm of the Belgium group Colruyt. This transaction allowed Metro Group to diversify its routes to market in France, one of its key markets.

Carrefour continued to increase its European footprint with an extended presence in 27 additional Spanish cities through the acquisition of 36 Eroski’s stores, the control over 8 local shopping malls and 22 gas stations. The deal, sealed for €205m was one of the largest of the year.

A pool of investment funds led by Sagard, including Five Arrows, Siparex and Abenex, acquired a minority stake in Prosol, better known as Grand Frais. This funding is expected to support further expansion with the expected opening of 20 stores every year! The story did not stop there, as Ardian took a controlling stake in March 2017.

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Main deals in the Food sector involving French players – 2016

Scope: deal value > €10m or revenues > €50mPwC Analysis - Sources: Zephyr, Merger Market, Capital Finance

Period Target Country Activity Acquiror Country Type Deal size (€m) Revenues (€m)

Agri-business

H1 AGRI-NÉGOCE FR Agricultural cooperative AXÉRÉAL FR Corporate 100 176

H2

GROUPE AVRIL

SCA (BIOSECURITY

AND NUTRITIONAL

SPECIALTIES

BUSINESS)

FR Management of livestock

performance

NOVI 1 / TIKEHAU FR PE 27 129

H2 YNSECT FR

Animal feed made from

converted organic insect

substrates manufacturer

ANGEL INVESTORS FR PE 14 -

H1CHARCUTERIE

PIERRE SCHMITTFR

Catering food manufacturer,

Cured meats and sausage

manufacturer

ALLIANCE

ENTREPRENDREFR PE - 150

H1

AGRIAL (POULTRY

PROCESSING

ACTIVITY)

FR

Poultry-processing business and

specilized transport company of

Agrial S.A.

LDC FR Corporate - 85

H1GROUPE

BEGANTONFR

Fish, shellfish, and crabs

markets and suppliesMERICQ FR Corporate - 60

H1 COCORETTE FROrganic eggs production

(outdoor farming)ŒUFS NORD EUROPE FR Corporate - 49

Food processing

H2MATERNE MONT

BLANCFR

Natural fruit snacks and dairy

productsFROMAGERIES BEL FR

Corporate

(65%)553 362

H1

MONDELEZ –

(French confectionary

activity)

US/FR

Candy brands sold: Carambar,

Malabar, Krema and Pastilles

Vichy

EURAZEO FR PE 250 -

H2ANIK INDUSTRIES

(DAIRY BUSINESS)IN

Dairy product manufacturing

businesses

B.S.A. INTERNATIONAL

(GROUPE LACTALIS)BE Corporate 64 141

H2 ALBALACT ROButter, cheese, milk and yogurt

manufacturerLACTALIS FR

Corporate

(94,8%)64 99

H1 CELNAT FR Production of organic grain mill EBRO FOODS SPCorporate

(100%)26 22

H2

DUFOUR

SISTERON/GROUPE

OVIMPEX

FRProcessing and distribution of

meat

ARTERRIS / COOPERATIVE

AGNEAU SOLEILFR Corporate - 328

H2

SICA DE VIANDES

DE L'YONNE ET DU

LOIRET

FROperator of meat packing plants

and slaughter housesGROUPE SICAREV FR

Corporate

(100%)- 119

H2 UKL ARRÉE FR Poultry producer TRISKALIA FRCorporate

(100%)- 101

H1 CAFÉS FOLLIET FR Coffee producer

BPIFRANCE / CRÉDIT

AGRICOLE DES SAVOIE

CAPITAL / IDIA CAPITAL

INVESTISSEMENT

FR PE - 80

H1FROMAGERIE

GUILLOTEAUFR Cheese dairy EURIAL FR Corporate - 65

H2LA COMPAGNIE

DES DESSERTSFR

Ice cream manufacturer holding

companyARGOS SODITIC UK PE - 61

H1PÈRE OLIVE/KING

CUISINEBE/NE

Appetizers packaging

producer/Producer of cooled

fresh international specialties

LABEYRIE FINE FOODS FR Corporate - 60

H1 GELMER FR Processed seafood producerGREENLAND SEAFOOD

WILHELMSHAVENDE Corporate - 58

H1 GRAINDORGE FR Cheese manufacturer LACTALIS FRCorporate

(100%)- 50

Food retail

H1 BIG C THAILAND FR Hypermarkets TCC TH Corporate 3 100 3 400

H1 BIG C VIETNAM FR Hypermarkets CENTRAL TH Corporate 920 586

H1EROSKI (36

STORES)ES Hypermarkets and filling stations CARREFOUR FR Corporate 205 -

H2PRO A PRO

DISTRIBUTIONFR B2B food services METRO GROUP DE

Corporate

(100%)200 670

H1PROSOL GESTION

(GRAND FRAIS)FR

Fresh products retailer, the

Grand Frais store chain

FIVE ARROWS / SIPAREX /

ABÉNEX CAPITAL /

SAGARD

FR PE (15%) 105 1 000

H1 LEADERPRICE FR Discount retail stores CASINO FRCorporate

(50%)- 200

H1PEACE DINING

CORPUS Sushi corners in shopping areas HANA GROUP FR Corporate - 77

H1 VITAFRAIS FR Organic food wholesaler PRONATURA FR Corporate - 58

Offensive and defensive moves in agro / food maintained a sustained M&A activity.

Wine & SpiritsWho gave it a shot?

The wine & spirits segment was subject to considerable movements in 2016.

Although most deals continue to revolve around takeovers of French vineyards by national and foreign private investors, international groups have also reviewed their portfolio.

Pernod Ricard for instance disposed of its Domecq brandies and wines to Bodega Las Copas– a Spain based joint-venture held by GrupoEmperador Spain (50%) and Gonzales Byass(50%). With the aim of concentrating on its spirits and premium wine segments, the Group also sold its vodka brand Frïs to Louisiana-based Sazerac and on the other hand strengthened its premium spirits range with two new brands, Monkey 47 and Smooth Amber.

The premium spirits segment - and particularly the US whiskey category - was also one sought by Rémy Cointreau as the French player acquired Westland Distillery.

The Italian Davide Campari also took a double shot at the M&A game this year with the acquisition of family owned group Marnier Lapostolle (including, that is, Grand Marnier).

On the other hand the consolidation of the Wine segment as already identified in 2015 (cf our M&A overview) has been confirmed this year.

Ackerman, Wine wholeseller branch of Terrena, to name one, has reinforced its position in the Loire Valley through the acquisition of Drouet Frères, and became the third largest vineyard operator in Nantes (behind Castel and Grands Chais).

8

Personal care & CosmeticsWas 2016 Beauty-full?

9

Main deals in Wine & Spirits involving French players – 2016

Period Target Country Activity Acquiror Country Type Deal size

(€m)

Revenues

(€m)

H1SOCIETE DES PRODUITS

MARNIER LAPOSTOLLEFR

Production / distribution

de vins et spirituex (dont

Grand Marnier)

DAVIDE CAMPARI-MILANO IT Corporate137 105

H2DOMAINE BONNEAU DU

MARTRAYFR France-based vineyard STANLEY KROENKE US

Individual

(Majority)100 -

H1CHATEAU PERENNE/CHÂTEAU

GUÉRYFR Grape cultivation services SCEA DU CHATEAU DE SOURS FR

Corporate

(100%)12 0,4

H1VIGNOBLES MARIE-LAURE

LURTONFR Production de vin PHILIPPE FERRIER FR Individual 5 -

H2 BEJOT VINS ET TERROIRS FR Wine producer LES GRANDS CHAIS DE FRANCE FRCorporate

(100%)- 51

H2 LA GUYENNOISE FR Wine producer GUILLAUME BROCHARD CH/FR Individual - 44

H1 GRM FR Wine producer GUILLAUME BROCHARD FRIndividual

(100%)- 31

H1 LES VINS DROUET FRÈRES FR Wine producer ACKERMAN FRCorporate

(100%)- 20

H1 CHATEAU DAVID FR Wine producer THIERRY KERDREUX FR Individual - 10

Scope: deal value > €5m or revenues > €10m

Back to nature

Natural products currently account for 12% of the beauty market; 61% of women prefer to use natural organic ingredients on a daily basis.

This was reflected once again in M&A in the Personal Care & Cosmetics sector in 2016. In fact, both H1 and H2 have seen a number of deals in this segment, with companies strengthening their capital, and densifying their offer and positioning across the globe.

Ponroy, the natural health specialist, will benefit from the financial support of 3i and its co-investor Cathay Capital for the development of its brand portfolio as well as its international expansion –with a focus on Asia. With an annual turnover of €170m, there is no doubt that the additional €150m of capital will allow Ponroy to materialize its ambitions.

Triple game for Charterhouse which unites Vemedia, leading OTC player and recent owner of Oenobiol, to Cooper, the OTC drugs manufacturer and distributor.

The American chemistry specialist Hallstarincreased its portfolio of competences with the acquisition of Oleos, a French-based bio-active specialist; the Group expects to gain further market shares and worldwide influence through the exploration of new synergies.

A trend that spreads across borders

By acquiring German player HC Parfümerie (with turnover over €30m), family owned Group Jacques Bogart should benefit from increased visibility in Europe with an additional 80 stores and over 7 franchisees in Germany.

Although the sizes of operations differ from one actor to another, it is undeniable that the perfumery segment continues to be in a consolidating trend.

While Estée Lauder pursued the diversification of its perfumery portfolio through the purchase of By Kilian in H1, L’Oréal reinforced its high-end offers with Atelier Cologne. The scent specialist and its 6 stores in France, USA and Hong-Kong, weren’t, however, L’Oreal’s only acquisition in 2016.

Personal care & CosmeticsBeauty for grabs?

10

€1.1bn was the price paid for IT Cosmetics, the American premium make-up brand will now join L’Oreal’s forces as an integrated part of its Luxury division. On the other side of the spectrum, L’Oreal also acquired the Société des Thermes de Saint-Gervais-les-Bains and the brand licence of Saint-Gervais Mont-Blanc products.

In the meantime, family group Beauty Success (4 th

perfumery network in France) raised new financing and comforted its leadership through the acquisition of Esthetic Center, adding 200 beauty centers to its network – to offer the best of product and experience to consumers.

Consolidation, diversification and expansion: the Personal Care & Cosmetics sector and more specifically the natural product and ingredients segment promise to continue to be dynamic in 2017.

Main deals in Personal care and Cosmetics involving French players – 2016

Period Target Country Activity Acquiror Country Type Deal size

(€m)

Revenues

(€m)

Brands / Manufacturers

H2 IT COSMETICS US Premium makeup brand L'OREAL FRCorporate

(100%)1 130 182

H2 VEMEDIA BE/NE OTC drugs and devices COOPER / CHARTERHOUSE FRCorporate /

PE375

H2 PONROY FRNatural cosmetics and

heakth products

3I / MANAGERS / CATHAY

CAPITALUK/FR PE 150 170

H1

PERCIVA/ECP/JAI

KUDO

POLSKA/NIKON

OPTICAL MIDDLE-

EAST/OPTIC CLUB

US/SP/PL/

UAE/RUOptical glasses ESSILOR FR Corporate - 60

H1LABORATOIRE

OENOBIOLFR Food supplements VEMEDIA PHARMA BE/NE

Corporate /

PE- 57

H1 ATELIER COLOGNE FR Niche perfumery L'OREAL FR Corporate - 40

Retailers

H1 BEAUTY SUCCESS FROnline cosmetics and

toiletries retailerOCEAN PARTICIPATIONS FR PE 18 108

H1 VISION DIRECT UKOnline optical products

retailerESSILOR FR

Corporate

(100%)- 45

H1 ESTHETIC CENTER FR Beauty institutes BEAUTY SUCCESS FR Corporate - 36

H2 HC PARFÜMERIE DECosmetics and perfumes

retailerJACQUES BOGART FR

Corporate

(100%)- >30

H1FLEURANCE

NATUREFR

Mail order food supplement

sellerNATUREMEDIKA FR Individual - 25

Scope: deal value > €18m or revenues > €25mPwC Analysis - Sources: Zephyr, Merger Market, Capital Finance

11

Affordable luxury, online players as well as Health & Beauty brands remain highly sought after. Private equity is active but corporates have deep pockets.

Luxury and fashionDigging for treasure

12

Large French luxury groups completed their portfolio through new brands or new distribution channels

Looking for brands with strong heritage, LVMH made its biggest acquisition since the 2013 purchase of cashmere specialist Loro Piana and took over 80% of the German high end suitcase manufacturer Rimowa for a value of €640m. This deal brings a precious asset in the LVMH luxury empire, with an annual revenue of c.€400m, compensating for the disposal of Donna Karan as announced in H2 2016.

Thom Europe, holding company of Histoire d’Or, Marc Orian and TresOr - backed by the funds Bridgepoint, Apax, Altamir and Qualium - acquired Italian Stroili from its shareholders Investindustrialand L Catterton. The deal will form the largest European jewellery retailer, with total revenues of approximately €600m.

Orchestra Prémaman and the US based Destination Maternity merged to create a leading global provider of maternity apparel, baby goods and childrenswear. Their aggregated sales will amount to $1.1bn and offer significant synergy opportunities in cost, sourcing, cross selling and diversification of sales by product and channel across more than 40 countries and 1,800 retail locations.

Damartex acquired 100% of Vivadia, the online marketplace dedicated to seniors, during H1 2016 and entered into exclusive negotiations with 3SI to acquire 3 Pagen, a mail order retail specialist mainly active in Germany and Austria.

Only a few French affordable luxury fashion brands remain after investors’ rush

French affordable luxury brands are still attracting a lot of hype, leaving very few privately owned brands. SMCP and Carven have attracted corporate players.After two LBOs with L Capital and KKR, SMCP Group (Sandro, Maje, Claudie Pierlot) has been taken over by the Chinese textile company Shandong Ruyi for €1.3bn.

Bluebell Group, pioneer in luxury distribution in Asia, acquired a majority stake in the French brand Carven.

Private equity continues to support development of Brands: the Chinese investment fund Fosunacquired a stake in IRO. The Qatari sovereign investment fund, owner of Valentino, took over French fashion house Balmain. Similarly, French private equity Montefiore acquired a majority stake in Isabel Marant and Tara Jarmon was taken over by AMS Industries.

International investors have also shown interest in smaller niche players. Desseilles Laces, lacemaker in Calais has been taken over by Chinese family group Hangzhou Yongshen. The Japanese Onward Luxury Group (former Gibo), acquired Paris-Moreau, one of the oldest luxury French brands of handbags and luggage to pursue its diversification strategy, alongside the leather brands Jil Sander and brand licenses (including Rochas and Michael Kors).

Online 3rd party retailers continue to grow and to consolidate the market

Since its North American entry and withdrawal, Vente-privée focused its development on the European market and has been building scale across countries before a potential IPO. After the acquisition of the Belgian Vente-exclusive in 2015, it acquired two additional groups in Europe during H1 2016: Eboutic.ch in Switzerland and Privalia in Spain (for a value of €500m).

Their competitor, French private fashion sales provider, Showroomprivé acquired Saldi Privati and became the second actor in online private sales in Italy. With this acquisition, Showroomprive wants to further deploy its international strategy initiated last year, achieving thus more than 20% of its turnover abroad.

Galeries Lafayette Group acquired instantLuxe.com, a second-hand luxury products online distributor and BazarChic, an online private sales retailer, to carry on its omnichannelstrategy.

Home goods, appliances and electricalsSupplying out of home?

13

Aspiration for critical mass and omnichannel strategies

3 out of the 10 largest deals in 2016 occurred in this segment, amongst which the acquisition of Darty by prominent French retailer Fnac. After a long bidding process against Conforama, Fnac won the €1.16bn battle, with the additional support of Vivendi which acquired €159m worth of shares i.e. 15% in the Fnac Group.

With over 250 new stores in France, Fnac Dartyaspires to become Europe’s leader in cultural goods and high tech products retail. The integration should yield significant synergies and help the group face competition from e-commerce players such as Amazon and C-Discount.

C-Discount itself faces further competition as LDLC strengthens its position as one of the top 5 major e-commerce computer players in France through its acquisition of Materiel.net from Domisys.

Similarly, Vente Du Diable acquired Pixmania in financial difficulties. Pixmania’s marketplace and knowhow should allow its acquirer to expand its activity and develop services.

Innovation at the heart of strategic thinking

German players have attracted quite a number of their French neighbors over the past year.

Group SEB acquired WMF (for over €1.5bn) and Emsa, in order to further pursue its international expansion strategy in particular in the UK and Germany.

Product portfolio and diversification was also at stake for the Taiwanese electronics manufacturer Hon Hai which invested €100m in Devialet, the French acoustic equipment specialist.

Will “But” score?

As H2 came to a close, Clayton Dubilier & Rice won the prize for H2’s biggest deal in the sector. With a deal sealed at €780m the fund joins forces with WMHolding (Lutz Austrian furniture manufacturing group) in a 50/50 partnership in BUT’s capital.

This should provide sourcing synergies with Lutz and financing for BUT which aims to expand further in order to compete with the respective #1 and #2 furniture retailers in France, IKEA and Conforama (group Steinhoff).

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Main deals in Home goods, appliances and electricals involving French players – 2016

Scope: deal value > €40mPwC Analysis - Sources: Zephyr, Merger Market, Capital Finance

Period Target Country Activity Acquiror Country Type Deal size

(€m)

Revenues

(€m)

Manufacturers

H1 WMF GEProfessionnal coffee machines

manufacturerSEB FR Corporate 1 020 -

H1 PARROT FR High-tech products

HORIZONLIVE / HG VORA

CAPITAL / IDG CAPITAL

PARTNERS / BPIFRANCE

FR PE300

326

H1 WITHINGS FR Connected objects NOKIA FICorporate

(100%)170 -

H2 DEVIALET FRAmplification technology for

audio devicesHON HAI PRECISION INDUSTRY FR/US/JA

Corporate

(100%)100 -

H1 EMSA GE Kitchen items manufacturer SEB FR Corporate 80 92

H1 MK DIRECT FR Household linen brand EURAZEO FR PE (54%) 49 186

H1CAUVAL

INDUSTRIESFR Mattress manufacturer PERCEVA FR PE 40 1 240

Retailers

H1 DARTY FR Electrical products retailer FNAC FR Corporate 1 160 3 657

H2 BUT FRElectrical appliance & furniture

retailer

CLAYTON DUBILIER & RICE /

LUTZ FAMILYUS/AT

PE (50:50

partnership)780 1 500

H1 FNAC FR High tech and cultural products VIVENDI FR Corporate 159 3 876

Scope: deal value > €40m

Specialist retailers & other

15

Specialist retailers have attracted Private Equity’s interest

Sports has been one of the playgrounds of private equity in 2016.

This year, Weinberg Capital dropped its moorings on the fishing specialist Pacific Pêche and in H2, proceeded with the acquisition of Alliance Marine, leading specialist in France in the distribution of equipment and spare parts for the renovation and maintenance of water sports as well as professional marine sector.

To stay on top of the wave, Montagu Private Equity acquired Aqua Lung from Air Liquide, one of the key players in personal aquatic equipment and scuba diving gear.

Raise Capital took a minority stake in Nature & Découvertes in order to support their development strategy – invest in the brand, operate its digital transformation and accelerate international expansion.

In July 2016, Activa Capital took control, alongside management, of Atlas for Men, the catalogue and web distributor of outdoor textiles for men.

After LFPI and Montefiore’s acquisition of Interflora in 2015, Perceva drove consolidation, with the acquisition of Au nom de la Rose to strengthen Emova Group (Monceau Fleurs, Happy, Rapid’ Flore). .

Main deals in Specialist retail & other consumer goods involving French players

Period Target Country Activity Acquiror Country Type Deal size

(€m)

Revenues

(€m)

Manufacturers

H2 CANSON FR

Manufacturer and distributor of

quality paper for fine art, school

and technical purposes

FABBRICA ITALIANA LAPIS ED

AFFINIIT Corporate

85 -

H1 WOODBRASS.COM FR Online music instruments retailer SODERO GESTION FR PE 5 45

H2 ALLIANCE MARINE FREquipment for the marine and

marine industry

WEINBERG CAPITAL

PARTNERS- PE - 100

H2 AQUA LUNG FR Scuba diving equipment MONTAGU PE - PE - 200

Retailers

H1 MR BRICOLAGE FR DIY ANPF FR Franchisees 35 2 160

H1 BRICO PRIVÉ FR DIY ARDIAN FR PE 7 55

H1NATURE &

DÉCOUVERTESFR

Retail chain for hiking and

outdoor activities products

RAISE INVESTMENT / CRÉDIT

MUTUEL ARKÉA- PE - 185

Ecommerce / Omnichannel

H2 DUCATILLON FREcommerce platform for

breeders and hunters

OMNES CAPITAL / BPI FRANCE

/ JEAN-MARC BERNARDFR PE 8 22

H1 DOMISYS FR Online high-tech products retailer LDLC.COM FRCorporate

(100%)- 152

Scope: deal value > €5m or revenues > €100mPwC Analysis - Sources: Zephyr, Merger Market, Capital Finance

The show must go on…

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Overall, key trends observed in 2015 continued to drive deal activity in 2016

Confidence to grow European platforms

Despite Brexit, key French players remain confident in their ability to drive European platforms in order to take advantage of the wealthy and sustainable European market (groupe SEB with WMF, Essilor with Vision Direct and Luxottica, Carrefour with Eroski, Cooper with Vemedia..).

Reshuffling of brands and activities remains a source of opportunities for both private equity and corporate

Several substantial carve outs following the ongoing reshuffling of FMCG groups’ brand & activity portfolio (such as Mondelez confectionary brands) provide opportunities across sectors for corporate and private equity investors alike.

Search for growth markets and balance foreign exposure

European players developed in emerging or growing markets particularly on the agro business front to reach critical mass in these countries and diversify geographical risks

Growth segments around beauty, health, nature and bio

Highly sought after are targets in attractive segments such as Bio, natural, healthy, fresh product, local distribution circuits , as these segments capture an increasing part of the consumers’ wallet in mature countries with better margins. Luxury emerging brands, affordable luxury, as well as online pure players or innovative distribution start-ups will also be assets highly fought for.

Defensive segment concentration

Concentration continues and post-merger integration plans must follow to deliver on value creation promises.

2017 should follow these trends with some new features

IPO

After a low number of operations recorded in 2016, we envisage a higher number of IPO in 2017, despite the electoral context, starting with operations already announced IPO, like ShowroomPrive, Carmila (Carrefour real Estate) or dual track processes like Picard, Afflelou …

Mega deals

To gain the few points of margins lost under sales price pressure on mature markets or to grab market share in growing segments, we see FMCG groups continue a dynamic management of their portfolio of activities, source opportunities for both corporate and funds

Essilor Luxottica illustrate these strategic moves to generate commercial synergies, allow manufacturer to gain a direct assess to customers and secure succession plans.

The French food sector in particular should pursue its reorganization both with domestic concentration, search for value add markets and international expansion.

America and AfricaDespite its new political environment, the USA remains an attractive market with expected growth and margins, particularly attractive for French FMCG groups.

Bonduelle announced a game-changing acquisition in the USA, with Ready Pac Food, making fresh food the largest activity of the group historically know for canned vegetables and the USA its first market.

On the other hand, Africa remains a difficult and contrasted continent but its population growth with improving purchasing power makes it a focus of attention in most R&C boardrooms. Starting via franchise and local partnerships, we see the slow and cautious development continue in this region.

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PwC Transaction Servicesthanks its clients for their continued trust

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Advisor of

in its acquisition by CD&R and Lutz

Minority stake of

in

Advisor of

in its acquisition by

Disposal by

of its minority stake in

Acquisition by

of

Acquisition by

of a stake in

Acquisition by

of

Advisor of

in its capital reorganization

Disposal by

of

Financière Cofidim

Joint venture between

and

Acquisition by

of

Acquisition by

of

&

Acquisition of a majority stake by

in

Mk Direct

Advisor of

in its cession to investment fund Mayhoola

Acquisition by

of a stake in

A selection of Deals in R&C announced in 2016

Acquisition by

of

Disposal by

of

Acquisition by

of

Acquisition by

of

Acquisition of a majority stake in

by

• Identify and assess value creation

levers and related

financial impact with

fully integrated due

diligences: Finance,

Strategy, Operations inc.

carve out, and ESG –

Environment, Social, Governance,

Tax & Legal aspects

• Assist, prepare and negotiate

transition contracts

• Plan & execute Take Over (“Day-1”

plan)

• Define Integration Strategy

• Prepare 100-Day plan

• Set up Integration Management

Office

• Deep dive into target’s business and operational performance and design value

creation plan

• Execute 100-Day plan

• Assist on the integration / transformation and track synergy delivery

• Manage change and acculturation

• Corporate and Business Unit

strategy

• Determine and validate deal

rationale

• Identify potential acquirers or

build-up opportunities and

assess Target’s potential

• Prepare divestment and

conduct carve-out project

• Review strategy, identify further growth

opportunities and assess potential

• Diagnose and improve operational

performance (sales and marketing, supply

chain, manufacturing, footprint, support

functions…)

• Turnaround and restore profitability with

restructuring plan

• Review ESG risks and opportunities and

assist on ESG strategic plan

PwC Deals Strategy & Operations team supports Private Equity and Corporates in every steps of their acquisition, integration and divestment processes

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Selection of projects where PwC Deals Strategy & Operations teams assisted R&C players in 2016

SectorDeal cycle

stepsDescription

1 Screening of potential targets in the delivered foodservice wholesale sector

2 Integrated Financial and Commercial vendor due diligence on a store consumables manufacturer and wholesaler

2Buy-side operational due diligence of an industrial pastries business in the context of its acquisition by an international corporate

player

2 , 3 , 4Buy-side Financial and carve-out due diligence, Day-1 readiness assistance and product portfolio performance analysis in the

context of the acquisition of a sports equipment player

2 , 3 Buy-side IT due diligence and assistance to Day 1 readiness for support functions for a spare parts retailer

3 Day-1 readiness assistance on local support functions for the merger between two leading branded coffee players

3 , 4Business continuity, new operating models and transition services exit assistance on all functions (Marketing, Sales, R&D,

supply-chain, procurement, manufacturing, distribution, finance…) in the context of a large international deal in cosmetics

5 Restructuring strategy and business plan elaboration of an underperforming Business Unit for an office consumables manufacturer

5 Assess financial and ESG impacts of a private label food producer’s performance improvement plan

5 Ecosystem review and target screening of digital players for a specialist home entertainment player

2

Ops.

Fin.

Strat.

1

53

Services provided by Deals Strategy & Operations teams along the Deal cycle

4

Thought leadership

Strategy

Pre deal

Deal execution

1 2

4

5 3Deal cycle

Contacts

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SabineDurand-Hayes

Partner PwC TransactionsRetail & Consumer Leader

PwC France

sabine.durand@fr.pwc.com

+33 1 56 57 85 29

Anne-LiseGlauser

Partner Strategy&

anne-lise.glauser@strategyand.fr.pwc.com

+33 1 56 57 84 53

Ghislaine Chevalier

Director PwCTransactions

ghislaine.chevalier@fr.pwc.com

+33 1 56 57 16 04

NourTekaya

Marketing & Business Development

nour.tekaya@fr.pwc.com

CécileBouzereau

Marketing & Business Development

cecile.bouzereau@fr.pwc.com

+33 1 56 57 13 17