A case of M&A reflecting life?

Press speculation in the last couple of days about two potential but completely unrelated transactions could be viewed as symbolic of many economies across the world where the gulf between the “haves” and the “have nots” seems to be getting ever wider.

Potential deal number one involves the Dubai-based Rivoli Group, which is a luxury retailer with over 300 shops across the Middle East. Dubai International Capital, which acquired the entire business in 2007, but subsequently sold a stake to Swatch in 2008, is rumoured to be selling its remaining stake to its neighbour, Saudi-based Al Rajhi Capital.

Potential deal number two involves Poundland. The UK-based discount retailer, where every item is sold for £1, is supposedly considering an IPO. This could be a possible exit for private equity firm Warburg Pincus, which in 2010 acquired the business in a secondary buyout from Advent International, the UK investment house that first invested in the company in 2002.

Poundland and Rivoli are both fundamentally retailers, yet the customers they serve are at vastly different ends of the spectrum. Rivoli specialises in luxury goods purchased by those with the income to support such shopping habits, whereas Poundland serves customers whose disposable income doesn’t stretch to high value luxury items.

Yet both companies are clearly still showing growth potential, not surprising as designer goods retailers are thriving in existing and newly prosperous economies, but proving beyond doubt that unfortunately there is still a present and growing market for discount retailers in many countries.

Filed under: economy, IPO, luxury, M&A, retail, consumer