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Deals, it appears, go through cycles.  

Some years the market is red hot and other times — well, things fall apart. Or shift in some way. For example, 2020 kickstarted a wave of initial public offerings. They hit a 20 year high, with a total of 12 IPOs in the retail segment. The following year saw a blizzard of special purpose acquisition companies, or SPACs, that were used as a vehicle for going public

This year, Retail Dive has been tracking deals in many forms, including equity stakes, sales and spinoffs. And while a handful of mergers and acquisitions went through, a number of deals went awry. Financial deals didn’t necessarily fall apart, rather just went in a different direction than many analysts and observers expected. 

Dealmakers are currently concerned with the increased cost of capital, according to Mark Williams, chief revenue officer at Datasite Americas. “Uncertain valuations are having a significant impact on M&A overall, including pausing larger acquisitions and merger processes, especially among corporate and private equity dealmakers,” Williams said in emailed comments.

Overall, consumer deal volume in the Americas, which includes retail, was down 31% through the first half of this year when compared to 2021, according to Datasite’s research.

Different factors have affected conditions for deals this year, according to Kirthi Kalyanam, professor of marketing and executive director of the Retail Management Institute at the Leavey School of Business at Santa Clara University. The retail industry is undergoing a transformation, which puts a lot of business models under pressure. In addition, macroeconomic headwinds and a proliferation of new retailers that have yet to show profitability are also impacting the market for deals.

The current deals environment is due to “misalignment between management and what investors want,” Kalyanam said.

Here are three deals that happened so far in 2022 that had a different outcomes than what originally was anticipated.

1. Kohl’s and Franchise Group

Kohl’s has had a dramatic year, which perhaps reached its zenith with the rejection of a takeover bid from Franchise Group. The holding company, which owns brands such as The Vitamin Shoppe, Pet Supplies Plus and Buddy’s Home Furnishings, offered the department store $53 per share, down from an earlier offer of $60. 

“Despite a concerted effort on both sides, the current financing and retail environment created significant obstacles to reaching an acceptable and fully executable agreement,” Kohl’s Board Chair Peter Boneparth said in a statement at the time. 

It may have been the best offer the retailer is ever going to get, according to multiple analysts. 

“They got a pretty good offer,” Kalyanam said. “And they turned that offer down. And then they spent about $900 million so far in shareholder related dividends and buybacks … Kohl’s behavior to me is a head scratcher.” 

But, the retailer may never have wanted the potential deal from the start. “Kohl’s management never really wanted to sell the business, favoring instead to follow their own strategic plans,” GlobalData Managing Director Neil Saunders said at the time of the takeover bid. “They entertained Franchise Group as it was the least worst option and would have kept the company intact and some of the current management in place, but they will not likely mourn the termination of talks.”

2. ODP and Staples

In the world of office supplies, ODP Corp. and Staples have been the will-they-or-won’t-they relationship of note.

ODP, which owns Office Depot and OfficeMax, decided this summer to reject all of its suitors and remain independent. The decision came after a lengthy process wherein Staples was pursuing a takeover that started in early 2021 in a bid of $40 per share or $2.1 billion. (ODP said that, in addition to Staples, the company also rejected another offer made by an unnamed party.)


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