Global automotive M&A value was strong in the first half of 2018. Automotive M&A deal value is up 29% to $40.0 billion, and the average disclosed deal size increased 21% to $280 million when compared to the first half of 2017. Although volume is down, with half the year left, 2018 deal value has reached 84% of the full year 2017 deal value of $47.9 billion.
The increase in value and average deal size is primarily driven by three megadeals in 2018 compared to one in 2017. All three megadeals were by Parts and Component Manufacturers accounting for $22 billion of deal value, or 54% of all disclosed deal value in 2018. Likewise, all six megadeals announced since 2015 were transacted by Parts & Component Manufacturers (Suppliers). Over the past several years, suppliers have generated strong cash flows on increased vehicle volumes, resulting in higher cash balances and lower debt levels, providing significant capacity to do deals.
Asia and Oceania acquirers spent $18.7 billion in 2018, or 47% of disclosed deal value as the industry in that part of the world grows faster than the overall industry. The majority of deal activity continues to be local deals.
“Automotive M&A shifted into high gear in in the first half of 2018 as automotive companies look to drive shareholder value through mergers, acquisitions and spin-offs.”