TORONTO, June 6, 2011 — A significant increase in merger and acquisition (M&A) volume and value in Q1 2011 signals a positive outlook for global industrial manufacturing (IM) deal activity. According to a new PwC report, the last quarter saw 36 deals above US$50 million take place globally, amounting to US$16.6 billion. This is a significant increase of 157% in volume and 622% in value from the same period in 2010, which saw 14 deals totalling just US$2.3 billion.
“We’re seeing two interesting trends in deal activity with Canada on one side of the spectrum and global results on the other. Canada is holding steady with recent years with a moderate level of deal activity, yet deal volumes and values globally took off this quarter,” says Damian Peluso, partner in PwC’s Deals practice.
Canadian results show domestic IM companies are dragging their heels on M&A activity when compared to their global counterparts. Canadian M&A activity remained flat with recent years this past quarter with 15 announced deals valued at US$69 million. This is similar to Q1 2010 when there were 15 transactions with a combined value of US$78 million.
The largest Canadian deal of the quarter was a private equity exit with Clairvest Group Inc. and Clairvest Equity Partners selling Van-Rob Inc.—a supplier to major automobile manufacturers—to Germany’s Kirchhoff Automotive for US$35.8 million.
So far in the second quarter, however, Canadian deal activity has mirrored the global trend of large deal values. Q2 2011 has seen two large Canadian deals valued at more than US$500 million take place. The first was Berkshire Partners and OMERS’ announced acquisition of Husky Injection Molding Systems for US$2.1 billion. The other was Chemtrade Logistics Income Fund’s acquisition of Marsulex Inc. for US$546 million. Both deals were exits of private equity investments.
“The outlook looks positive for continued deal activity in the coming months both in Canada and certainly on a global-scale,” says Calum Semple, national Industrial Manufacturing leader, PwC. “The rising Canadian dollar and shrinking profit margins due to rising commodity prices may drive more consolidation in the Canadian industrial manufacturing market.”
PwC expects four key themes for the Canadian IM sector for the remainder of 2011:
For a copy of Assembling Value, PwC’s quarterly analysis of M&A activity in the global Industrial Manufacturing sector, visit: http://www.pwc.com/us/en/industrial-products/publications/assembling-value.jhtml
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