Transportation Acquisitions Drop Year Over Year

NEW YORK — The first three months of 2013 have seen a total of 35 acquisitions and mergers in the transportation and logistics sector, according to PwC (Price Waterhourse Coopers), a decrease from the same period last year.

During the first quarter of 2012, there were 38 transactions representing $24.7 billion. The 35 transactions so far in 2013 have totaled $15 billion. 

Much of the slowdown in deals can be attributed to ongoing economic uncertainty, PwC explained.

“Continued global economic uncertainty contributed to the decline in first quarter M&A volume and value, especially in the U.S. and Eurozone, but we’re still seeing a number of positive catalysts that will likely support M&A activity as the year progresses,” said Jonathan Kletzel, U.S. Transportation and Logistics Leader for PwC.

Seventy-seven percent of percent of transportation and logistics transactions in the first quarter of 2013 were due to strategic investors, PwC said, much of that having to do with recovering stock markets. “The general rise in stock markets is giving a relative advantage to strategic acquirers, as these companies are increasingly using stock to meet richer seller valuations,” Kletzel explained. “This also means that strategic investors are relying less on their ample cash holdings, which should provide additional dry powder for future M&A.” During the first quarter, PwC noted “close to nine percent of transactions involved stock swaps, almost doubling from four and a half percent for all of 2012.”

Asia and Oceania accounted for 19 transactions of the 35, worth $6.9 billion together. China was the most active country with 11 deals as a result of domestic consolidation in shipping and terminal assets.

On top of market consolidation in Asian countries, “the need for infrastructure M&A in developed nations aimed at closing budget gaps and raising capital for improvements is another driver of potential deals,” said Kletzel.

Transportation infrastructure deals accounted for the majority of mega deals, PwC said, pointing to developed nations that are working to close budget gaps and raise capital.

“For example, as Greece grapples with massive debt, it reportedly plans to privatize the Hellenic Railways Organization and has also expressed interest in selling its stake in Athens International Airport and numerous regional airports,” PwC explained. “Similarly, the city of Chicago has selected bidders in the event that there is another push for privatization of Chicago Midway Airport under an FAA pilot program.”

Interestingly, PwC sees the airlines sub-sector as a strong contributor to this year’s deal flow. “The distressed nature of many constituents will likely contribute to transaction activity, and in addition to bringing in new capital, these types of deals would help improve access to international routes,” PwC explained.