Megadeals pace growth in 2015 transportation and logistics M&A, says PwC
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Driven by a steady steam of megadeals, recent data from PwC US in its quarterly “Intersections” report showed that 2015 was a banner year for transportation and logistics merger and acquisition (M&A) activity, with total 2015 deal value nearly doubling 2014’s output.
Deals cited by PwC in its data report represent all announced deals for the quarter-as opposed to completed deals only-and the report does not parse out deals that are withdrawn, intended, or pending, and only deals valued at $50 million or more are included.
For all of 2015, megadeals, which Pwc defines as transactions valued at more than $1 billion, came in at $172.7 billion, which was up 49.9 percent over 2014’s $87 billion, while deal volume dropped by 3 percent from 231 to 224. The report observed that the fourth quarter of 2015 was particularly strong, as it accounted for $73.1 billion, or 42 percent, of total 2015 deal value. What’s more, the fourth quarter saw a 171 percent sequential increase over the third quarter and 206 percent annual increase, even though volumes were off 9 and 25 percent, respectively.
There were nine megadeals in the fourth quarter with a cumulative value of more than $61 billion, while 2015 saw 28 megadeals valued at a total of $124.9 billion, which was ahead of 2014’s 17 megadeals at $37.2 billion by 236 percent.
“We weren’t entirely surprised to see an increase in mega deal activity - as the industries consolidate, companies involved in deals tend to be larger,” said PwC U.S. Transportation and Logistics Leader Jonathan Kletzel in an interview. “It is part of the natural cycle of an industrywide consolidation effort - fish eat other fish and become bigger fish. While mega deal activity has slowed in some modes such as airlines where consolidation has been in play for several years, the more fragmented modes are still ripe for consolidation.”
Megadeals were particularly attractive in the United States, with PwC saying it accounted for eight of these deals that represented 41 percent of total 2015 megadeal value.
Kletzel said this was due in large part to Canadian companies looking to increase scale and expand their geographic reach into the U.S. market, with two of the three largest 2015 deals involving Canadian acquirers and U.S. targets.
Local market deals represented 59 percent of 2015 deal activity, according to PwC, while 51 percent was spurred on by cross-border transactions, which saw value spike nearly three times to $114.9 million as volume rose 31 percent.
As for what drove local market growth, Kletzel pointed to how companies in the fragmented trucking and shipping sectors are acquiring growth to make up for sluggish organic growth and also looking to leverage economies of scale as well.
About the AuthorJeff Berman Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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