PwC: Smaller deals drive industrial products M&A

By Rob Starr, Content Manager, Big4.com

PwC’s IP practice examined activity in the second quarter of 2012 across six sectors: aerospace & defense (A&D), chemicals, engineering & construction, industrial manufacturing, metals and transportation & logistics. According to a series of quarterly merger & acquisition (M&A) reports released recently by PwC US, Mega deals (transactions worth more than $1 billion) remained constrained and overall deal activity was driven by smaller transactions (less than $50 million).

Across the entire IP industry, there were 173 transactions worth $50 million or more totaling $64.7 billion in the second quarter of 2012, compared to a 228 deals and $76.9 in total value during the same period in 2011. Given the restrained M&A environment, second quarter deal activity included a high proportion of divestitures as companies sought to eliminate underperforming operations, as well as trim their exposure to slowing economies.

There were a total of nine mega deals across the IP industry during the second quarter of 2012, a significant decline from 24 such deals in the previous quarter.   For perspective, only the transportation & logistics sector recorded more than two mega deals during the second quarter.  There were no mega deals within A&D and only one deal each in the engineering & construction and metals segments.

Looking at select sectors, deal activity in the transportation & logistics sector stood out as being very healthy during the second quarter of 2012.  There were three mega deals bringing the total to nine mega deals announced during the first half of the year, only two shy of the total number announced for all of 2011.  Deal activity was driven by infrastructure, including road and airport concessions, as governments in developing markets seek to boost growth.  The U.S. demonstrated strength in sector M&A activity, while China and the Eurozone experienced decreased M&A volume.