NEW YORK, NY– Strong fourth quarter merger and acquisition (M&A) activity in the transportation and logistics industry represented the highest quarterly volume in three years, driving full-year 2012 results significantly above those of 2011, according to Intersections, a quarterly analysis of global deal activity in the transportation and logistics industry by PwC US.
In the three-month period ending December 31, 2012, there were 68 transportation and logistics transactions worth $50 million or more totaling $26.5 billion, a significant increase compared to 39 deals representing $15.5 billion in the third quarter and 36 deals totaling $14.8 billion in the fourth quarter of 2011, said the report.
“The flurry of activity in the fourth quarter contributed to a strong overall result for 2012, driven by deal recovery within the Eurozone,” said Jonathan Kletzel, U.S. Transportation and Logistics Leader for PwC. “Our overall outlook for global transportation and logistics M&A is positive due in part to economic performance in emerging and developing markets. Based on our analysis, we are forecasting 22 percent growth in announced volume and 15 percent growth in announced value in 2013, compared with 2012 as strategic and financial investors continue to consider M&A as part of their growth strategies.”
Another sign of strength in the transportation and logistics deal market were the 16 mega deals (with values of $1 billion or more) announced in 2012, which edged out the 15 mega deals in 2011. There were four mega deals in the fourth quarter alone, a majority of which involved infrastructure targets.
In contrast to previous quarters, U.S. deals in the fourth quarter were relatively weak, likely hurt by fiscal cliff negotiations, the sluggish current expansion and concerns about the debt ceiling debate.
Regionally, Europe and Asia and Oceania were highly active during the fourth quarter of 2012, particularly in local deals.
In addition, cross-border deals became more prominent among acquirers in 2012. “This trend is likely to continue with advanced economy acquirers looking to purchase more foreign entities in higher growth countries, and more emerging market acquirers growing large enough to begin to see merger opportunities internationally,” added Klaus-Dieter Ruske, global transportation and logistics leader for PwC.
Freight operators were more frequent targets in 2012, making up 31 percent of transactions. While infrastructure deals accounted for a lower proportion of the deal market in 2012 compared with the past seven years, the majority of mega deals announced throughout the year were infrastructure targets. Infrastructure deals are likely to become more important to overall sector M&A due to budget pressures in developed countries and the need to secure more investment to support growth in emerging and developing countries, according to PwC.
“We believe the balance of risks favors an optimistic outlook for transportation and logistics M&A in 2013 and we are looking at several themes including the potential for more large infrastructure deals, Russia’s broad five-year privatization plan contributing to the mega deal table and significant headline risk in the form of U.S. and European country-specific concerns,” said Kletzel.