Intersections: Q2 2010

This quarter, Intersections continues its special report series on making smarter deals in a changing environment and examines merger integration and the ever increasing importance of capturing synergies to maximize deal value. The discussion explores the importance of cost containment, identifying synergy targets, and identifies strategies for successful M&A integration.

In the second quarter 2010, M&A deal activity in the global transportation and logistics industry continued a general trend of convalescence during the quarter as measured by number of deals. In addition, average deal values remain well above that of the prior year when adjusting for the impact of the $36.7 billion Burlington Northern acquisition. The relative level of participation by US entities has increased but we acknowledge that substantial risks remain in this economy, which could serve to attenuate future totals.

We believe that the first-half of mega deal activity, with the exception of the JAL announcement, is a harbinger of upcoming deal flow in the sector. The near-term deal environment will likely continue to be driven by large strategic acquirers looking to reposition early in the traffic upturn.