US transport M&A reaches 9-year high

Dealmakers pushed the accelerator in the last quarter, with transactions of more than $1bn representing 63% of total activity.

US transport M&A deals are set to remain firmly on the fast lane this year as racy performance in Q3 pushes year-to-date stats to their highest in nine years, according to a new report.

While Q3 2015 saw a decline in deal volume year-over-year, PriceWaterhouseCoopers found that average deal value has continued to rise consistently with the previous four quarters.

Total activity in the first nine months of 2015 remained consistent with 2014, though deal value was up 55 percent year-over-year to $97.9 billion from $63.1 billion last year. 

“Following a strong start to the first half of the year, transportation and logistics deal activity tapered off slightly during the third quarter, though we are expected to still be on track to have a successful year for deal activity in the sector,” said Jonathan Kletzel, PwC's US head of transportation and logistics. 

In total, Q3 2015 saw 44 announced transactions worth $50 million or more with a total value of $28.8 billion – a 30 percent drop in volume and a 27 percent drop in value from the previous quarter. Down 28 percent by volume from the same quarter last year, deals did however see a 36 percent rise in value.

Mega-deals of $1 billion or more, while down quarter-over-quarter, represented more than 63 percent of total deal activity.

More than half of all deals in the sector were located in Asia and Oceania, spurred on by activity in China, where 12 of the 24 regional deals took place. Three quarters of them happened in the local market.

Cross-border expansion also continued to play a key role in Q3, particularly in advanced economies. Financial investors grew to represent roughly 48 percent of total deals in this arena, as compared to 44 percent in the previous quarter.

Logistics companies drove a significant portion of activity at roughly 23 percent, a trend PwC expects to continue as more companies look to outsource logistics operations. In Q3 2015, transport and logistics (T&L) company divestments grew to almost 55 percent of total deal activity, from 43 percent in the first half of the year. 

The consultancy expects T&L companies to continue divesting business operations and shedding non-strategic businesses. It said that despite the slow third quarter the outlook remains optimistic for 2015 as a whole, with Q4 generally a strong quarter for M&A activity as strategic investors make preparations for the year to come. 

“Historically, the fourth quarter has been a popular time for M&A activity as strategic investors prepare for next year's operations, and we believe the M&A environment will likely see increased activity.”