It’s been nearly six months since The Deal magazine reported that more and more corporate acquirers were eying the distressed market for potential targets. So, did they arrive?
If we narrow the definition of distressed deals to transactions involving a bankrupt seller, the answer is yes. According to The Deal Pipeline’s bankruptcy M&A database, 79 corporations have acquired or been approved to buy assets from a bankrupt seller so far this year. That compares to 51 similar transactions in the same period last year, and 102 total in 2008.
Looking more closely at this year’s numbers, it’s no surprise the automotive industry has seen the most action from corporate buyers of distressed assets. There have been 12 bankruptcy M&A deals involving a strategic buyer since Jan. 1. Highlights include:
- Hertz Global Holdings Inc.’s acquisition of Advantage Rent A Car Inc.
- Seffner, Fla.-based Lazydays RV Center Inc.’s acquisition of 154 Fleetwood Enterprises Inc. trailer units.
- Penske Automotive Group Inc.’s acquisition of General Motor Corp.’s Saturn brand.
- Navistar International Corp.’s Workhorse International Holding Co.’s acquisition of certain Monaco Coach Corp.’s recreational vehicle assets.
Retail was the next most active industry for corporate buyers, with nine transactions, including:
- Winter Sky Retail Ltd.’s acquisition of Madhouse Ltd.
- Aurora Fashions Ltd.’s acquisition of Mosaic Fashion Ltd.
- Sleepy’s Inc.’s acquisition of Dial-A-Mattress Operating Corp.
Strategic acquirers were also active in the media and energy industries, with six and seven transactions, respectively.
For corporate acquires that have yet to dive into the deepening pool of bankrupt assets, be aware that the learning curve is steep. As Sullivan & Cromwell LLP partner Frank Aquila said, even prenegotiated terms will likely be revisited in a bankruptcy sale. Still, as the data above indicates, the opportunities available may be too good to keep many strategics sidelined for long.