2007 was a big year for mergers and acquisitions in the transportation and logistics sector. Total volume reached a 20-year high with 1,291 deals last year, toppling the prior record reached in 2006, according to Intersections, PricewaterhouseCoopers’ quarterly report on M&A in the global transportation and logistics industry.
Despite the record number of deals, the total deal value of $83 billion for 2007 was down significantly from the 20-year high of $164 billion set in 2006. This was due in part to several large deals announced in 2006, including competing bids for a passenger air target and the proposed acquisition of another passenger air target; all bids but one were eventually withdrawn, however.
The big deals announced during 2006 also led to a decline in the average deal size, which fell from $1 billion in 2006 to $426 million in 2007. But the average deal size in the fourth quarter of 2007 increased slightly to $435 million from the prior quarter.
Given the tightening in the credit markets, transactions involving financial investors were expected to fall as a proportion of deal value in 2007. But financial investors accounted for nearly 45% of deal volume, up from 40% in 2006.
“The pace of M&A activity in the transportation and logistics industry was unaffected by the noticeable decline in total acquisitions by financial investors in the fourth quarter,” said Kenneth H. Evans, Jr., U.S. transportation & logistics sector leader, PricewaterhouseCoopers. “Notwithstanding the impact of increased risk premiums on credit liquidity during the second half of the year, the pace of announced deals actually increased in the fourth quarter.”
For more information and to access the Intersections report, go to www.pwc.com/transport.