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Trump, Brexit puts global M&A in freefall - study

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Political upheaval around the world, including Brexit and the rise of Donald Trump, have pushed mergers and acquisitions in the FMCG area to their lowest levels for five years, a new report has said.

The report said factors including last year’s US presidential election left companies wary of M&A

The report said factors including last year’s US presidential election left companies wary of M&A

The total value of worldwide M&A activity among the top 50 consumer goods giants fell sharply from US$226bn in 2015 to $50bn in 2016, according to the OC&C Strategy Consultants' 15th annual Global 50 report, in collaboration with UK retail trade magazine The Grocer. The report said factors including the UK's decision last year to leave the EU and November's US presidential election have left companies wary of "pulling the M&A trigger".

"The bottom fell out of consumer goods M&A in 2016, and political uncertainty has undoubtedly played a significant part in this," OC&C's Will Hayllar said.

The report said the lack of M&A activity was particularly notable because organic revenue growth is at an historic low. In such a situation, activist shareholders often put companies under pressure to spend on acquisitions and stimulate growth.

"There's more reason than ever for M&A activity," Hayllar said. "Clearly, events across Europe and the US made many cautious."

Looking ahead, the report said the first half of 2017 has pointed to a recovery for M&A. Between January and May, ten deals with a combined value of $87bn were announced.

The OC&C Global 50 assesses the performance of the world's 50 largest FMCG businesses, ranked on their sales. In this year's top ten, PepsiCo remained in third spot, ahead of The Coca-Cola Co, which dropped from sixth to seventh. Anheuser-Busch InBev was the top alcohol producer, moving up from seventh to sixth. Nestle remained in the top spot, followed by Procter & Gamble.

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