Retail M&A seen restarting with a bang

By Rachel Sanderson and Eleanor Wason

LONDON (Reuters) - Retail mergers and acquisitions look to have dried up for at least another nine months, according to speakers at the Reuters Retail and Consumer Summit, but once the credit crunch eases and consumer trends are more predictable, buyers are poised for dealmaking.

"I'm very confident not much is going to change in the next six to nine months," said James George, a partner at strategy consultancy OC&C specialising in the retail and consumer goods sectors.

"Beyond that it is quite difficult to predict because people are keen to get back in. Private equity is keen to second guess the starting whistle because someone is going to make a lot of money on the rebound."

European retail shares .SXRP have shed nearly 30 percent of their value in the past six months, almost equal to the losses sustained by the European bank stocks .SX7P.

Still, retail stocks are predicted to have further to fall because the impact from the credit crunch and rising commodity costs is only just starting to be felt by consumers.

Casualties are already evident in the British market. Shares in sofa retailer ScS Upholstery SUY.L fell more than 50 percent last week on complications with its financing related to the credit crunch.

While deals for private equity-held companies such as New Look and Pets at Home have been put on the back burner.

"We will see M&A starting up again substantially when the credit crunch is over and that will be when the financial markets are convinced most of the bad assets have been fully accounted for," said Ira Kalish, Director, Global Economics, Deloitte Research.