Shopping Centers Today

MAY 2012

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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consolidate their sectors and will be acquisitive; those that are not doing as well will seek to shed assets, and some will put themselves up for sale." In the wake of the financial cri- sis, smart retailers did everything they could to slash costs and shore up bal- ance sheets. They now must find some other way to boost profits, which makes M&A; more likely, says Robert J. Coble, who specializes in consumer markets as KPMG's national leader of corporate transaction services. "To become prof- itable now, retailers will have to find a larger customer base through geographic or product spread," Coble said. "You can do that organically by opening new stores. But the fastest way is to acquire a known customer base through acquisi- tions, which is why this is going to be the trend for 2012." The pace of retail M&A; is already on the upswing, according to research firm Dealogic. During the recessionary nadir of 2009, Dealogic recorded 173 U.S. re- tail M&A; transactions, at a total value of about $7.7 billion. Last year the firm recorded 271 deals, valued at about $15 billion all told. That was a substantial improvement over 2009, to be sure, but still a long way from the $48.3 billion deal volume reached in 2005. So far this year, some of the widely discussed M&A; transactions in retail include the possible sale of Collective Brands, which owns the 4,160-store Pay- less ShoeSource chain, and the ongoing bidding process for women's apparel chain Talbots, which has 517 stores. Pri- vate equity firms, in particular, are keen on both Talbots and Collective Brands, says a source close to the deals and who requested anonymity. (Potential buyers for Collective Brands include Brown Shoe Co. and South Korea's E-Land Group, according to Bloomberg Business- week.) Meanwhile, the better-performing retail chains are bound to start gobbling up their weaker competitors, Coble pre- dicts. "There are a lot of [weakened re- tailers] out there," he said. "It runs the gamut from small bookstores and bou- tique apparel companies to large grocery chains and mass merchandisers." Buying the store U.S. retail sector mergers and acquisitions Announced 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD No. 432 285 200 201 230 247 285 263 211 173 233 271 64 Deal Value ($b) 17,563 6,134 7,361 19,299 39,605 48,310 44,392 40,287 16,244 7,746 15,004 15,076 1,315 SOURCE: DEALOGIC

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