Rail supply industry consolidation continued through 2013's first half, EdgePoint says

A long-running trend of consolidation in the global railroad supply industry continued through second-half 2012 and first-half 2013, according to a mergers-and-acquisitions (M&A) report recently issued by EdgePoint Capital Advisors.

Ninety-one transactions were reported in the 12-month period. In 2013's first half, there were 45 reported M&A transactions, of which 31 closed by June 30 and 14 still were pending, the report states. Twenty-five of the transactions were reported in Europe, followed by 17 in North America and one each in Africa, Australia and South America.

There was a flurry of M&A activity in the United States late last year as 26 rail transactions closed prior to a long-term capital gains tax rate increase, EdgePoint officials said in the report. M&A activity was subdued in Europe last year due to widespread economic malaise, but picked up a bit in the first half, they said.

"Germany, the strongest European economy, was the most popular site for target companies, with nine transactions," EdgePoint officials said. "Russia's fast-growing rail sector saw seven of its companies [get acquired] in the 12 months ended June 30, 2013."

Meanwhile, Asia had few reported acquisitions in the period, but attracted interest from North American and European participants for investment and export opportunities, the report states.

Overall, Siemens AG was the most active company in the 12-month period, closing two transactions and announcing a third, EdgePoint officials said. Siemens also completed the largest transaction in that timespan: a $2.8 billion purchase of United Kingdom-based Invensys Rail to obtain further strength in rail signaling and automation, especially in North America and Europe, the report states.