US for sale – the importance of strategy in deal-making – Nixon Peabody

With the current value of the dollar the perception may be that the US is for sale, but what we are increasingly seeing are very strategic acquisitions by foreign investors, says Kendal Tyre, transactional partner at Nixon Peabody in Washington DC.

The relative strength of the euro, he notes, is helping to drive an upturn in foreign acquisitions, which now account for around 20% of all US M&A deal activity. “The continuing attraction of US assets means that foreign investors are clearly now getting more value for their money, and this is evident in the rise in deal numbers.”

Indicative of both this upturn and strategic investment is the interest being shown by international investors in the US beverages sector, says the head of the firm’s dedicated practice, Robert Carrol, in San Francisco. And within which, behind headline deals such as InBev’s $52 billion (€33bn) acquisition of Anheuser-Busch, there are a growing number of very focused and equally skilful investments being made across the wine, beer and alcohol sectors.

“The winery sector, for example, is one in which we are beginning to see consolidation and rising asset values. But across the beverages sector as a whole there are emerging very targeted trade and funds-backed acquisitions, and the entry of new international operators and products.”

Despite the evident opportunities, the sector is indicative also of the potential regulatory complexities that can impact on US deal-making, he says. “Prohibition-era regulations still dictate a very strict ownership division between retail, distribution, and production operations, and which emphasis the need to work closely with the authorities.

We have often been asked to step in and restructure deals that have come up against the near-sacrosanct regulations affecting the sector,” explains Carrol.

Indeed, an understanding of the interplay of both state and federal legislation is crucial for effective deal planning, highlights Kendal. “The US offers foreign investors a very attractive and very stable but it is also one in which it is essential to ensure that the correct strategies are in place from the outset.”