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Transportation and logistics M&A value holds steady

With a lack of megadeals and a drop in average deal value, Q4 closed as the weakest of 2014 in terms of deal value and second-weakest in terms of volume.


Keeping in line with the general climate of 2014, merger and acquisition (M&A) activity in the transportation and logistics sector held steady through the fourth quarter of last year, according to PwC's latest report released February 19.

“M&A activity in the fourth quarter remained consistent with the subdued levels we witnessed throughout 2014, however, we are cautiously optimistic regarding 2015, as the recovery in many advanced economies continues,” said PwC's US transportation and logistics leader Jonathan Kletzel.

“The US economy remains strong and a strong US dollar makes acquisitions by US players cheaper for offshore targets. Countries in Europe are beginning to see improvement and emerging and developing economies continue to grow.”

With 208 transactions worth $50 million or more carrying a total deal value of $75 billion, 2014 saw a slight increase in volume over the 205 deals closed in 2013 while value fell slightly short of the $75.1 billion worth of transactions closed that year.

Quarter-on-quarter, Q4 2014 saw a significant decline from 2013, with 53 deals worth $15.9 billion closed this year compared to the 80 deals worth $30 billion closed in the same period last year.

PwC said a significant factor in the decline can be attributed to the lack of megadeals – transactions worth $1 billion or more – as 2014 saw fewer large acquisitions than previous years. Megadeals in the quarter accounted for $13.9 billion of total deal value for the sector.

Trucking and shipping drove deal volume for the year, together accounting for 47 percent of annual activity, PwC said. Trucking particularly saw significant deal growth, accounting for 20 percent of total volume as compared to 12 percent in 2013.

“As we noted in our third quarter analysis, the number of trucking transactions is picking up and these acquisitions were once again a major focus of the market during the fourth quarter. This is largely due to the highly fragmented industry, as larger companies acquire smaller ones in order to achieve increased market share,” Kletzel said.

“At the same time, we believe that overcapacity in shipping is driving consolidation in that mode as larger players attempt to reduce competition and create more effective economies of scale.”

Led by China, Asia and Oceania continued to dominate M&A volume for 2014, accounting for roughly half of global activity, according to PwC. European companies accounted for 28 percent of deal volume, with two UK megadeals securing the region's second-place status for Q4. North America was the third most active M&A market during the period at 23 percent of global deal volume.

Consistent with recent years, local market transactions accounted for the majority of activity, at 69 percent. Cross-border transactions were particularly low in emerging economies compared to more advanced counterparts, clocking in at 11 percent of those deals. He said this trend is expected to continue in 2015.

Looking forward, Kletzel said PwC expects global decline in fuel costs would improve profitability in the sector and supplement inorganic growth through M&A transactions.