Industry Trends
Home Depot Expands Market Reach with SRS Distribution Acquisition
Home Depot completed its acquisition of building products distributor SRS Distribution for $18.25 billion. The deal is expected to increase Home Depot’s total addressable market to approximately $1 trillion and enhance Home Depot’s capabilities in the professional roofer, landscaper, and pool contractor sectors. Home Depot’s CEO, Ted Decker, highlighted SRS’s strong leadership and customer service as key assets that will complement the world's largest home improvement retailer.1
The Waning Wave of American Consumerism
Years of high inflation and interest rates continue to strain American consumers, deplete pandemic savings, and further increase debt burdens. Retail sales have stagnated, and consumer spending, which drives two-thirds of the U.S. economy, has shown cracks. A strong job market, with sub-4% unemployment, is the final pillar buoying the U.S. economy. The American economy’s resilience should not be underestimated despite the economic data signaling a potential slowdown.2
Saks to Acquire Neiman Marcus in Luxury Retail Shakeup
Saks Fifth Avenue's parent company, Hudson’s Bay Company, will acquire Neiman Marcus for $2.65 billion. The union of the two luxury retailers results from consumer restraint on prestige purchases. The merger, which includes Amazon and Salesforce as minority stakeholders, will consolidate the iconic brands without closing stores. This strategic move highlights the evolving landscape of luxury retail as it grapples with steep declines following the market boom witnessed during the pandemic.3
Inflation Eases as Fed's Preferred Gauge Shows Steady Progress
Inflation shows signs of easing in Q2 2024, with consumer prices flat from April to May, marking the mildest increase in over four years. Core inflation, excluding food and energy, rose just 0.1%, the smallest uptick since spring 2020. This development has bolstered hopes for Federal Reserve rate cuts by September.4
Q2 2024 Dealmaking Heats Up in the Retail Sector
After a quiet Q1, consumer and retail deal activity picked up in Q2 2024 as sellers adapted to the higher-for-longer interest rate environment. Despite a 9% year-over-year drop in transaction volume, transaction value surged 63% YoY to $27 billion. Sellers are electing to approach a potential buyer one-on-one for deal discussions despite longer deal timelines and have expanded their diligence, asking for greater disclosure on market sizing, brand positioning, and top-line projections. Take-private transactions are also becoming more common to escape shareholder demands for growth every quarter.5
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
- Carrols Restaurant Group, Inc.
- Restaurant Brands International Inc.
- $1,709.12
- Snap One Holdings Corp.
- ADI Global Distribution
- $1,440.97
- MSR Resort Lodging Tenant, LLC
- Henderson Park Capital Management
- $705.00
- Motional Ad LLC
- Hyundai Motor Company
- $448.00
- SEA Electric LLC
- Exro Technologies Inc.
- $294.00
- PointsBet USA Inc.
- FBG Enterprises Opco, LLC
- $225.00
- Hyatt Regency San Antonio Riverwalk Hotel
- Sunstone Hotel Investors, Inc.
- $221.76
- The William Vale Hotel LLC
- EOS Hospitality LLC
- $177.00
- Retail stores and operations of Express, Inc.
- Simon Property Group, L.P.; Brookfield Properties, Inc; WHP Global, LLC
- $174.00
- Hilton Boston Back Bay
- Certares Management LLC; Belcourt Capital Partners
- $171.00
Other Financial Buyer Transactions Closed
- Target
- Buyer
- Value($mm)
- 3 Casino Resorts of Silverado Franklin Hotel & Gaming Complex, the Deadwood Mountain Grand and Baldi
- Gaming and Leisure Properties, Inc.
- $105.00
- W Fort Lauderdale Hotel and Residences
- Blackstone Real Estate Advisors L.P.
- $97.65
- Home2 Suites by Hilton Phoenix Downtown
- Chatham Lodging Trust
- $43.36
- Denver Hotel Teatro, LLC
- RLJ Lodging Trust
- $35.53
- Eastern Shore Centre
- Wicker Park Capital Management, LLC
- $33.20
Other Strategic Buyer Transactions Closed
- Target
- Buyer
- Value($mm)
- 21 Franchise Restaurants In North Carolina
- First Watch Restaurants, Inc.
- $75.00
- Hilton Seattle Hotel
- APA Hotel USA, Inc.
- $68.80
- Cambria Hotel Washington, D.C. Convention Center
- Frontier Development & Hospitality Group LLC
- $40.80
- Jim Burke Automotive, Inc.
- Hallmark Automotive Group
- $40.00
- Bear's Best Las Vegas, L.P.
- Mulligan Holdings, LLC
- $30.50
Source S&P Capital IQ as of 7/9/2024 and PCE Proprietary Data
PCE Transactions
Served as advisor to Taylors Pharmacy on their sale to Revelation Pharma
Served as advisor to Steinhafels Holding Company, Inc. as they became 100% ESOP owned
Served as advisor to OOBE Holdings, Inc. on their sale to OOBE Holdings ESOP Trust
Served as advisor to Wawa as the Wawa ESOP Trust purchased additional shares of Wawa, Inc.
Contacts
Data Assumptions This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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