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September 2010
by Katie Berk, Assistant Editor
The merger and acquisition environment provides reason for optimism in the global transportation and logistics sector. The number of deals and pace of deal value in the second quarter indicate an ongoing recovery in the industry, according to a PricewaterhouseCoopers L.L.P. report issued Aug. 12 titled, "Intersections: Second-quarter 2010 global transportation and logistics industry mergers and acquisitions analysis."
In 2Q, overall deal activity was strong and the pace generally remained above 2009 levels. Twenty-nine deals were announced in the quarter, vs. 14 in 2Q 2009. However, the total announced deal value of $13.1 billion lags the year-ago period's total, which was skewed upward by Berkshire Hathaway Inc.'s acquisition of BNSF Railway Co., according to the report.
In addition, the second quarter's total comes up far short of the 43 deals announced in 2Q 2008.
"We're nowhere near back to where we were in '07, but we're well, well ahead of 2009," says Kenneth Evans, U.S. transportation and logistics expert for PricewaterhouseCoopers.
The M&A market's relative improvement shows signs of recovery, according to Evans. However, the possibility of a "double-dip recession" could impact future activity, he added.
Meanwhile, interest in Asia and Oceania targets has grown significantly compared with deals targeting entities in other regions, according to the report. In 2Q, Asia and Oceania targets accounted for 69 percent of deal volume vs. 49 percent in 2Q 2009.
However, there was a decline in the proportion of deal volume in other regions. One exception: North America, which also accounted for significant deal value due to two major deals announced during the second quarter.
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