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PwC report says 2012 was a strong year for transportation and logistics deal activity

By Jeff Berman, Group News Editor
February 11, 2013

Fourth quarter 2012 merger and acquisition (M&A) activity in the transportation and logistics sectors was at its highest level in three years, according to Pricewaterhouse Coopers’ (PwC) report “Intersections: Fourth Quarter 2012 global transportation and logistics industry mergers and acquisitions analysis.”

Deals cited by PwC in the Intersections 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all announced deals for the quarter-as opposed to completed deals only-and the report does not parse out deals that are withdrawn, intended, or pending.

Fourth quarter deal value—for deals valued at $50 million or more—was $26.5 billion and represents 68 announced deals with an average deal value of $413 million, compared to 39 deals representing $15.5 billion in total value in the third quarter and 36 deals totaling $14.8 billion in the fourth quarter of 2011.

For all of 2012, PwC reported that there were 193 deals valued at $50 million or more, totaling $80.5 billion, which topped 2011 deal value by 35 percent.

“What we saw in the fourth quarter was a pretty healthy deal-making market overall in terms of the number of deals,” said Jonathan Kletzel, U.S. transportation and logistics advisory leader for PwC, in an interview. “Some of this was driven by activity in the Eurozone, and in the U.S. there was a bit of a pullback due to the Fiscal Cliff negotiations and relatively flat economic growth there. I would have expected to see some more deals at the end of the quarter in the U.S. with companies trying to get ahead of corporate gains tax changes but companies were being more cautious.”

Of the 68 announced fourth quarter deals, nine involved a U.S.-based target or acquirer. And for all of 2012 there were 38 deals with a U.S.-based entity, slightly ahead of 2011’s 37.

PwC said that along with the Fiscal Cliff overhang and slow domestic growth in the U.S., deal-making activity was likely also hindered by the debt ceiling debate, whereas in the Eurozone it said there was a recovery in deals involving countries in Southern Europe, with about half of Eurozone targets involving local shipping consolidation.

And in 2012 the report observed that there were 16 transportation and logistics mega deals—valued at $1 billion or more—with four of those deals occurring during the fourth quarter.

Among these deals was a $1.17 billion acquisition of Matson Navigation Co. Inc. by shareholders in December and Maersk LNG A/S being acquired by Teekay LNG Partners LP for $1.4 billion in October.

What’s more, PwC said freight operators represented 49 percent of transactions in 2012, with infrastructure deals also still in demand, although infrastructure deals were down in 2012 compared to the previous seven years. And infrastructure is likely to become more important in the future, too, said PwC, with budget pressures in developed countries needing to secure more investment to support growth in emerging and developing countries.

Looking ahead, PwC is forecasting 22 percent growth in announced volume and 15 percent growth in announced value in 2013.

“We believe we are in a global economic recovery and with that comes a fair amount of pent-up demand more so than we have seen in the past few years,” said Kletzel. “And as the economy improves, the pace of demand for deal flows is also likely to improve.”

The report added that in 2013 there are expectations for increased large infrastructure deals, especially in high-growth emerging markets and advanced markets, a mega-deal arena spurred by Russia’s broad five-year privatization plan and what it called significant “headline risk” in the form of U.S. and European country-specific concerns.

The breakdown by mode for deals valued at $50 million or more in fourth quarter was as follows: 39.71 percent shipping, 13.24 percent passenger air; 17.65 percent passenger ground, 17.65 percent logistics, 5.88 percent trucking, 4.41 percent, rail, and 1.47 percent other. And for all of 2012, shipping was at 25.91 percent, passenger air was at 15.54 percent, passenger ground was at 24.35 percent, logistics at 16.58 percent, trucking at 9.33 percent, rail at 5.18 percent, and other at 3.11 percent.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

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. .(JavaScript must be enabled to view this email address).


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News · PwC · Merger and Acquisition · All topics

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