Mergers and acquisitions in the global transport and logistics sectors dipped slightly in the third quarter on fewer deals in emerging markets, but the market remains “resilient,” according to PricewaterhouseCoopers US.
There were 39 deals worth $50 million or more totaling $11.3 billion in July-September, compared with 46 transactions valued at $11.3 billion in the second quarter and 43 deals worth $21.2 billion in the third quarter of 2010, the consultant said.
“Deal activity was resilient in the third quarter of 2011 despite concerns over macro economic trends that included fears over European debt, the potential for double dip recession in the U.S. and fewer deals in the emerging markets,” said Kenneth Evans, U.S. transportation and logistics leader for PwC.
Strategic investors drove the majority of M&A activity in the third quarter with 68 deals worth $50 million or more in the third quarter, compared to 60 percent for the whole of 2010.
“With the recent volatility in capital markets and the continued stockpiling of cash by large sector constituents, it seems that strategic investors are relatively well-positioned to engage in new deals and drive any further recovery in M&A totals,” Evans said.
Financial investors were more active in megadeals, executing three of the four transactions worth $1 billion and more in the third quarter.
“Financial investors, who typically looks at deals in the transport and logistics sector for value and stable cash flows, will continue to focus on distressed targets and largest shipping and infrastructure deals,” Evans said. “It’s a positive sign to see that acquirers are still pulling the trigger to execute large deals in the face of today’s market challenges.”
Deal activity is shifting toward shipping and logistics and away from passenger targets in 2011, according to PwC’s latest quarterly analysis. Three of the four mega deals in the third quarter were shipping and logistics transactions with a total value of $3.8 billion.
The biggest deal in the third quarter was the pending $1.75 billion acquisition of Korea’s largest logistics company, Korea Express, by local investment consortium CJ Group.
The largest shipping transaction was the pending $1.05 billion acquisition of GE SeaCo, the ocean container leasing company, by China’s HNA Group and Hong Kong-based Bravia Capital. The second-largest shipping megadeal was the pending purchase of a $1 billion stake in Diamond Shipping by a group of financial investors including WL Ross and sovereign wealth fund China Investment Corp.
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