M&A activity buoyed by ‘megadeals’

Global consultancy PwC has released the newest edition of its quarterly analysis of mergers and acquisitions (M&A) in the global transportation and logistics (T&L) sector.

The analysis covers all T&L transactions worth US$50 million or more, across passenger air, passenger ground, shipping, logistics, trucking and rail industries.

Global transportation and logistics M&A activity remained stable in 2016, though Q3 2016 was slightly less active. With 50 deals, the quarter saw a decline of 11 per cent in deal volume compared to both Q2 2016 and Q3 2015.

Despite a gradual decline in volume, M&A activity remains strong with respect to volume and value. There were five transactions over US$1 billion, known as 'megadeals' in Q3 2016, with the take over of the Port of Melbourne Corp in Australia the largest at US$7.3 billion (€6.8 billion).

According to the report, “five megadeals held about 54 per cent share of the total disclosed deal value in Q3 2016”.

According to PwC, it appears general uncertainties related to the US presidential elections, the long-term impact of Brexit, and China’s economic growth paired with reduced forecasts of international trade activity may have impacted recent M&A activity.

While the report states the Asia & Oceania region continues to lead in M&A activity, South America and Europe (excluding UK & Eurozone) saw an uptick in deal volume and a sizeable increase in deal value.

“We believe that underlying fundamentals in the industry —a drive to globalisation, corporate outsourcing of the logistics function, the continued global growth in e-commerce and the fragmented nature of some of the key subsectors—will continue to drive growth and associated M&A activity,” the report stated.

“Further, we expect Asia to continue to be a strong contributor to this M&A activity, as consolidation of the sector continues in many countries in the region and companies continue to seek access to the capital markets that help them capture these opportunities.”

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