Transportation acquisition volume, value decline
May 27, 2008 3:05 PM
Both deal volume and value in the transportation and logistics industry declined during the first quarter of 2008, according to the PricewaterhouseCoopers LLP Q1 2008 edition of Intersections: Global Transportation & Logistics Mergers and Acquisitions Analysis.
Global Deal activity is not on track to match the levels seen in 2007, however, the 45 deals (worth at least $50 million each) announced in the first quarter is on track to exceed 2006 levels, according to the report.
The credit markets and slowing deal activity in the United States significantly affected deal volume in the first quarter of the year. When excluding deals in which a US entity was the acquirer or target, the number of deals (38 deals) is on pace to exceed both 2006 and 2007 levels (119 and 142 deals respectively), indicating that a concern over an economic slowdown in the United States may be lowering the attractiveness of US targets, as well as the willingness and ability of US acquirers, to make deals, according to the PricewaterhouseCoopers analysis. Additionally, deal value for non-United States acquirers and targets ($15.9 billion) is also on pace to exceed the $53.4 billion reached in 2007.
In the first quarter of 2008, logistics targets accounted for the largest percentage of announced deal value, due primarily to the announcement of two large deals totaling $5.73 billion. For the balance of 2008, the passenger air category is likely to regain the lead in announced deal value due to the announcement of a $17.7 billion merger to create the world’s largest airline, according to PwC.
Firms in Asia and Oceania (Australia, New Zealand Melanesia, Micronesia and Polynesia) served as both the leading targets and acquirers in deal announcements of more than $50 million during the first quarter. Due to fewer planned acquisitions of US targets –- there were only five US deal announcements in total -– the pace of all overall North American deal targets declined significantly during Q1.
Consistent with findings from previous quarters, interest in BRIC targets, especially in China, continued to hold strong in Q1 2008. Chinese targets accounted for half of the eight proposed deals within the BRIC nations, driven primarily by the consolidation of the transportation and logistics sector within China. It’s also important to note that each of the four announced deals for targets in China were local market, or within-border, deals.
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