This holiday period is often called the ’silly season’. But recent deals show that making M&A hay in the summertime can be anything but silly.

These deals of considerable scale, encompass land-grabs as well as cloud-grabs. It’s salutary to note how the flight to digital can still come back down to earth.

Dollar Shave Club has been sold for $1bn

Dollar Shave Club

Dollar Shave Club has been sold for $1bn

Walmart has paid almost $3.5bn to acquire loss-making start-up Jet.com, that launched like a rocket last year but has a gross annual merchandise run rate that’s still less than a third of that sum.

Whereas Steinhoff is paying a little over $3.5bn (one times annual sales) for Mattress Firm to add 3,500 US stores to the group’s global portfolio of about 7,000.

No sleeping giant Steinhoff, whose Frankfurt-listed shares are up 21% this year (with a market valuation of €22bn) despite two failed recent M&A attempts.

“Another decade from now, Amazon Prime Air could well be a reality with self-driving trucks acting as mobile warehouses”

Mattress Firm is a profitable omnichannel, primarily a bricks and mortar retailer with big store expansion plans.

This contrasts acutely with the store closures announced by Macy’s, Sears, Kohl’s, Target and, indeed Walmart, which has also just sold its Mexican apparel chain Suburbia for about $1bn.

It’s wrong to see these moves as simply plotting an inexorable footpath to a store-less future. TJX, for example, has just announced plans to grow its global estate by 50% in the coming years.

Claiming a stake

Start-up pureplay upstarts (or ‘digitally native vertical brands’ in current parlance) will play David to the retail Goliaths for now, but perhaps not for ever.

Mattress Firm will be well aware of the danger from online brands such as Helix Sleep, Tuft & Needle, and Casper (the latter – whose revenues will hit $200m this year, two years after its launch – delivers ridiculously small boxes containing compressed foam mattresses that expand to full size when unpacked, and offers full refunds and free pick-ups within the first three months, if the mattress fails to please).

In July news of arguably the most important recent deal hit our screens: Unilever has paid $1bn for Dollar Shave Club, the subscription etailer of razor cartridges delivered to customers for as little as $1 per month.

It began in 2012, has still to make a profit and forecasts revenues of just $200m this year. Why did Unilever do so and why do some commentators even find this price “shockingly low”?

Predicting the next big thing

In a Stratechery article Ben Thompson referred to a critical conjunction of creations, more or less a decade ago: Facebook (2004) YouTube (2005) and Amazon Web Services (2006). These are the empowering forces of disruption that are now really flexing their muscles.

It was in 2005 as well that P&G paid $57bn to acquire Gillette. Dollar Shave Club is a relative minnow but one that already has 15% of the razor cartridge market by volume. Seems like $1bn could be a snip.

Amazon Prime was also launched in 2005. Another decade from now, Amazon Prime Air could well be a reality with self-driving trucks acting as mobile warehouses, roaming around catchments of consumers whose purchases will be delivered by drones from the trucks in a matter of minutes.

Not as silly as it sounds. Not at all.