Global engineering and construction deals insights: Q2 2017

Executive summary

The global engineering and construction (E&C) sector ended the first half of 2017 with an investment interest of $34.2 billion, 23% lower than 1H 2016. The majority of deal activity occurred in the construction materials manufacturing and civil engineering categories attributed to an increase in infrastructure and utility construction projects. While deal volume has decreased compared with 1H 2016, it continues to be supported by strong activity in the Asia & Oceania region.

The E&C sector has continued to benefit from the increasing rate of urbanization and infrastructure development in emerging economies like China and India. Meanwhile, developed markets are actively seeking geographical expansion and new project development opportunities in order to reduce their risk exposure.

There is a growing presence of tech companies and startups in the E&C sector, indicating an increasing potential for disruption. The sector has seen a rising interest in applications for mobile and cloud technologies, AI and robotics, AR/VR, and CAD software to make processes more efficient and streamlined. We expect that increasing infrastructure investment in emerging economies coupled with advances in technology will continue to drive the activity for 2H 2017.

Key trends/highlights

  • There were 49 deals announced in the Global Engineering and Construction sector with a total deal value of $21.6 billion in Q2 2017.
  • M&A activity was driven by the Civil Engineering and Construction Materials Manufacturing categories, contributing to 29% and 23% of the deal value year to date respectively.
  • Asia & Oceania continues to be the region with the most M&A activity by volume, accounting for 57% of acquirers and 61% of targets in global transactions in 1H 2017.
  • The engineering and construction sector was benefited from four megadeals in Q2 2017: the acquisitions of Wirtgen Group, WS Atkins, Bluegrass Materials and OHL Mexico.
  • The acquisitions of Wirtgen Group by Deere & Co is the largest deal in the sector with a deal value of $5.2 billion, accounting for 24% of total deal value in Q2 2017.
  • With 60% of total value, strategic investors made up the majority of transaction value in 1H 2017.

"Deal value rebounded in Q2 2017 driven primary by four $1.0 billion plus deals and 8 of the 10 largest deals in H1 2017. Overall deal activity, however, remained largely flat in Q2 versus Q1 and down from H1 2016. The market shows signs of moving beyond the uncertainty that we believe contributed to a slow start to the year, particularly in Europe."

Colin McIntyre, US Engineering and Construction Deals Leader

Contact us

Colin McIntyre
US Engineering & Construction Deals Leader
Tel: +1 (213) 356 6029

Michael Sobolewski
US Engineering & Construction Industry Leader
Tel: +1 (313) 394 3299

Jonathan Hook
Global Engineering & Construction leader
Tel: +44 (0) 207-8044753

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