Merger and acquisition (M&A) activity in the transportation and logistics industry reached is highest volume in three years during the fourth quarter of 2012, according to a survey conducted by global consulting firm PricewaterhouseCoopers (PwC), especially for freight-related operations – a trend that PwC’s experts believes illustrate increasing confidence that the global economy is on the rebound.
“The share of freight deals in total transportation and logistics deals has increased over the past three years [with] the recent uptick in freight-related M&A interpreted as indicator of expected economic recovery,” Jonathan Kletzel, U.S. transportation and logistics leader for PwC, told Fleet Owner.
In the fourth quarter last year, PwC recorded 68 transportation and logistics transactions worth $50 million or more for total M&A volume of $26.5 billion for that three-month period – 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 – with freight operators responsible for 49% of that M&A activity over the last three months of 2012.
PwC also noted the inclusion of 16 “mega deals” with values of $1 billion or more announced in 2012, which edged out the 15 mega deals in 2011, with four such “mega deals” occurring in the fourth quarter alone, a majority of which involved infrastructure targets.
This strong close to the year led 2012 annual volume and value to 193 deals totaling $80.5 billion, exceeding 2011 deal value by 35%, Kletzel noted.
“The flurry of activity in the fourth quarter contributed to a strong overall result for 2012, driven by deal recovery within the Eurozone,” he noted. “Based on our analysis, we are forecasting 22% growth in announced [M&A] volume and 15% growth in announced [M&A] value in 2013 compared with 2012 as strategic and financial investors continue to consider M&A as part of their growth strategies.”
Interestingly, Kletzel pointed out that while many expected that changes in U.S. tax laws were expected boost transportation and logistics deal making in the U.S. during the fourth quarter, most of the increase in M&A activity came from China, Russia and Europe, with many deals occurring in the shipping sector.
In addition, “cross-border” deals became more prominent among acquirers in 2012 – a trend likely to continue with companies in “advanced” economies acquirers looking to purchase more foreign entities in higher growth countries, and as more emerging market acquirers grow large enough to begin to see merger opportunities internationally, noted Klaus-Dieter Ruske, global transportation and logistics leader for PwC.