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International deal-making helped drive 'steady' transportation/logistics M&A activity in Q4, PricewaterhouseCoopers says


Globally speaking, merger and acquisition activity in the transportation and logistics (T&L) industry was steady during fourth-quarter 2008. Take the U.S. T&L industry out of the equation, and the global market arguably was downright healthy, according to a report released yesterday by PricewaterhouseCoopers L.L.P.  

In Q4, there were 43 announced mergers and acquisitions (disclosed deal value: at least $50 million), compared with 46 deals announced during the third quarter, according to the report, titled "Intersections: Fourth-quarter 2008 Mergers and Acquisitions Analysis." For the year, deal activity slowed a bit to 181, compared with 192 in 2007.
Although the economic downturn made an "obvious impact" on deal volume for domestic T&L targets, non-U.S. entities kept right on merging and acquiring, recording 145 deals in 2008, compared with 138 in 2007 and 119 in 2006.
"The healthy level of international deal activity that we've experienced may be the beginning of a positive trend that will continue in 2009," said Kenneth Evans Jr., U.S. transportation and logistics sector leader for PricewaterhouseCoopers, in a prepared statement. "As emerging markets improve and modernize their transportation infrastructure, deal volume and value are likely to grow much faster in these markets than in the United States, where investors are still leery about when an economic turnaround might occur."
International M&A activity also impacted total deal value in 2008. Deals involving U.S. entities accounted for only one-third of the total deal value announced during the past three years, according to the study. Of all of the deals announced during 2008 that involved U.S. targets and/or acquirers, only four out of 36 (9 percent) took place in the fourth quarter.
Meanwhile, the 21 "large" deals announced in 2008 exceeded those reported in 2007 (16) and 2006 (20). "Average" deal values announced in 2008 are subject to final closure but currently exceed levels achieved in 2007, at $513 million and $421 million, respectively, according to the study.
Shipping companies dominated the sector in the fourth quarter, representing 38 percent of all T&L deal activity; passenger ground targets accounted for 24 percent; passenger air-related activity, 14 percent.

"At this point, there is great disparity between strong and weak T&L industry players, which could necessitate alignments that would allow smaller players to survive," said Klaus-Dieter Ruske, PricewaterhouseCoopers' global transportation and logistics sector leader. "If ground transportation continues to be the most efficient method for passenger and cargo transit, further consolidation and partnerships within the airline industry may arise, as well."

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