Transport mergers & acquisitions slowing: Report

NEW YORK — Both deal volume and value in the transportation and logistics industry declined during the first quarter of 2008, according to the PricewaterhouseCoopers, and global deal activity is not on track to match the levels seen in 2007.

However, in its first-quarter 2008 edition of "Intersections: Global Transportation & Logistics Mergers and Acquisitions Analysis.," the company reports that the 45 deals (worth at least $50 million each) announced in the first quarter is on track to exceed 2006 levels.

The credit markets and slowing deal activity in the United States significantly affected deal volume in the first quarter of the year. When excluding deals in which a U.S. entity was the acquirer or target, the number of deals (38 deals) is on pace to exceed both 2006 and 2007 levels (119 and 142 deals respectively), indicating that a concern over an economic slowdown in the United States may be lowering the attractiveness of U.S. targets, as well as the willingness and ability of U.S. acquirers, to make deals, according to the analysis. Additionally, deal value for non-U.S. acquirers and targets ($15.9 billion) is also on pace to exceed the $53.4 billion reached in 2007. 


Given the weakness of the dollar, it’s surprising that U.S.
targets are not more attractive to foreign investors, says PWC.

"Deal activity in the transportation and logistics industry tends to decline during periods of recession. So, it’s no surprise that targets are down according to the Q1 analysis," said Kenneth H. Evans Jr., U.S. transportation and logistics sector leader at PricewaterhouseCoopers. "Deals involving non-U.S. entities are driving sector growth so far this year, and this trend will likely keep up until we see the loosening of United States credit market conditions."

In the first quarter of 2008, logistics targets accounted for the largest percentage of announced deal value, due primarily to the announcement of two large deals totaling $5.73 billion.

"Given the relative weakness of the dollar, it’s surprising that U.S. targets are not more attractive to foreign investors," said Klaus-Dieter Ruske, global transportation and logistics sector leader, PricewaterhouseCoopers. "Cross-border deals involving U.S. targets will pick up as worries over an economic recession subside – a trend we hope to see play out later this year."

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