The Level of Deal Making during the first quarter of 2009 was rather slow, with just 12 transactions. But that’s twice as many compared to the quarter last year. And factors that may have suppressed mergers and acquisitions activity may actually spur more deals in the rest of the year.
What happened in the first quarter? “Banks weren’t lending, companies were hunkering down and focusing on protecting their core businesses, and private equity firms were spending time working with their portfolio companies,” says Lee Helman, managing director with investment firm Financo, which tracks transactions for Multichannel Merchant.
What’s more, there was a rash of bankruptcies and liquidations in the quarter. Now that companies have taken their expenses down and are building cash reserves, Helman says, we may see the level of strategic deals pick up as businesses better understand what the rest of 2009 will bring them.
Shoes.com a fit for Brown Shoe
When: January The facts: Brown Shoe Co., a publicly traded footwear retailer and wholesaler, acquired the remaining 6.2% stake in Shoes.com for $3.6 million. (Brown Shoe acquired a controlling interest in Shoes.com in 2000.) The skinny: The fact that Brown Shoe Co. wanted to buy out of the remaining shares it didn’t already own is a sign that it is “banking on Shoes.com to continue to be a strong and meaningful performer for them,” Helman says.
Clarion Acquires Lenox Group Assets
When: February The facts: An investor group led by Clarion Capital Partners won the bankruptcy auction to acquire the assets of Lenox Group, a manufacturer and marketer of gifts and home decor under the Lenox, Dansk, Gorham and Department 56 brands. The purchase price has been estimated at about $100 million, including cash and the assumption of certain liabilities. In April, Clarion sold the Department 56 business to Enesco. The skinny: Helman says Lenox could serve as a platform for more distressed acquisitions in the home decor sector for Clarion.
Toys ‘R’ Us Buys eToys.com
When: February The facts: Toys and baby products retailer Toys ‘R’ Us acquired the e-commerce site eToys.com from The Parent Co. for an undisclosed sum. The deal also includes the BabyUniverse.com e-commerce site and ePregnancy.com parenting resource site. The Parent Co., which filed for bankruptcy protection in December, also operates the DreamtimeBaby.com, PoshTots.com, PoshLiving.com and My.Twinn.com e-commerce sites, among others. The skinny: Toys ‘R’ Us is finally becoming a true multichannel retailer, Helman says. “Given the surge in e-commerce during Christmas 2008, this was a value buy at the right time to gear up for anticipated continued growth in e-commerce for 2009.”