NEW YORK, N.Y.– Merger and acquisition (M&A) activity in the transportation and logistics industry had mixed results in the first quarter of 2015 as overall volume declined sequentially but deal value increased, according to Intersections, a quarterly analysis of global deal activity in the transportation and logistics industry by PwC US. Megadeal activity (transactions worth more than $1 billion) was the primary driver behind the increase in value, accounting for almost 55 percent of total deal value for the quarter.
In the first quarter of 2015, there were 54 announced transactions (worth $50 million or more) for a total value of $27.2 billion. This represents a slight dip from 62 deals in the previous quarter but the overall value increased by $5.8 billion. On a year-over-year basis, both value and volume surpassed the 44 transactions worth $17.7 billion in first quarter of last year. Five megadeals in the first quarter totaled $14.9 billion and were largely driven by acquirers from Asia and Oceania. As a result of the substantially larger deals being done, average deal value increased by 46 percent over the fourth quarter of 2014.
“The transportation and logistics industry got off to a strong start in the first quarter this year as deal value and volume continued its steady climb back from recent historic lows,” said Jonathan Kletzel, U.S. transportation and logistics leader for PwC.
“The financial marketplace is booming with overall M&A at record levels and surging capital markets, which may make this a favorable time for transportation executives to consider acquisitions,” he said.
According to PwC, Asia and Oceania accounted for the majority of deal value and volume in the first quarter. Driven by activity involving China, Australia, Japan and Singapore totaling $13.5 billion, the region accounted for more than 90 percent of total megadeal value. Reversing a recent trend, cross-border transactions gained significant momentum in the first quarter, accounting for almost 43 percent of all deals, however acquirers from advanced nations were far more likely to be involved in these transactions than emerging economies. A majority of cross-border activity was driven by strategic acquirers looking to improve geographic reach and increase long-term growth.
Similar to the previous quarter, trucking deals remained prominent in the first quarter, however activity was driven by the passenger ground and logistics industries, accounting for 40 percent of total deals. Passenger ground deals in particular experienced a significant uptick in volume to 20 percent, compared to just 12 percent in all of 2014. One key driver of improved activity across all modes will likely be the decline in fuel costs globally as diesel and gasoline prices hit their lowest level since 2009.
“While trucking deals dipped slightly in the first quarter, we expect them to remain an area of focus for the industry given the highly fragmented nature in that mode of transportation and the prevalence of smaller players that are ripe for consolidation as bolt-on acquisitions. As the industry seeks greater efficiency, and large to medium-sized companies look for growth rates higher than can be achieved through strategic means, these smaller companies may be prime targets for the larger players,” Kletzel concluded.