Global Transportation and Logistics deals insights: Q3 2019

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Executive summary

An increase in value and volume of deal activity in the Rail sector, supported by continued M&A activity in the Shipping, Passenger ground and Logistics sectors, saw average deal value in the T&L Sector increase by 34% over Q2 19 and reach levels not seen since Q1 2018.

Deal activity in North America was the main driver of this activity, witnessing the highest deal value and average deal value in that geography in the last three years.


“Total and average deal value in the T&L Sector increased for the fourth consecutive quarter in Q319”

Darach Chapman , US Transportation & Logistics Deals Leader

Trends and highlights

  • In Q3 2019, total transaction value increased by 29% from a year ago to $27.6 billion, the highest value recorded since Q1 2018.
  • Average deal size increased by 34% from the previous quarter, reaching $521.6 million.
  • The Rail category experienced the highest growth in deal value among all sectors this quarter, accounting for 34% of total investment value.
  • The pending acquisition of Genesee & Wyoming for $8.4 billion was the only megadeal reported in Q3 2019. The deal represented 89% of total investment value in the Rail category.
  • North America accounted for 62% of deal value by acquirer region with $17.1 billion in investments, the highest value recorded for the region over the past three years.

Highlights of deal activity

Sector category analysis

The Rail category experienced an uptick in M&A activity, with deal volume increasing by 67% over Q2 2019. Rail investments reached $9.5 billion, the highest value recorded in the past three years, and accounted for 34% of total deal value announced this quarter. The $8.4 billion pending acquisition of Genesee & Wyoming Inc. by an investor group comprised of Brookfield Infrastructure Partners L.P. and GIC Pte. Ltd. represented 89% of Rail M&A value. In turn, Genesee & Wyoming agreed to sell its stake in G&W Australia Holdings L.P. for approximately $426.6 million, as the company focuses on improving operational and capital efficiency while facing declining US rail freight traffic demand.

The Shipping category was the only other sector to experience value growth as investments grew by 23% from Q2 2019 to reach $5.1 billion. Three of the largest ten transactions announced this quarter belonged to the Shipping category, led by the $1.1 billion acquisition of Topaz Energy & Marine Ltd. by DP World Ltd., a port terminal operator. The Shipping sector also drove M&A volume and constituted 25% of deals announced in Q3 2019.

Passenger air transaction volume declined to its lowest level since Q3 2018 with only one deal announced this quarter: Delta Air Lines Inc.’s intended acquisition of a 20% stake in LATAM Airlines Group S.A. for $1.9 billion.

Regional analysis

North America accounted for 62% of deal value by acquirer region, experiencing an 80% increase from Q2 2019 with $17.1 billion in investments. While this was the highest value recorded for the region over the past three years, investments have concentrated on domestic M&A activity, which may be attributed to ongoing trade tensions and a strong US economy. North America acquirers focused 85% of investment value on local deals (within the region), while deals with a US acquirer and US target accounted for 58% of local North America M&A volume.

While the Asia & Oceania region continues to lead M&A activity, deal volume as a target region and acquirer region declined by 30% and 32%, respectively. T&L players in the Asia & Oceania region may be wary of dealmaking as tariffs have disrupted supply chains, with US companies manufacturing in Asia either relocating facilities or considering doing so. Moreover, increased regulatory scrutiny and expanding legislation may be a deterrent for cross-border investment, particularly for foreign acquirers of US companies.

Transportation and Logistics M&A Outlook

Overall it was robust quarter for M&A in the T&L Sector. Deal volumes were off the pace set in the previous three quarters but this was more than offset by the increase in average deal value. The value of cross border deals reached levels not seen since mid 2018, while North America deal value was at a three year high. Meanwhile, financial investor interest in the sector continued, accounting for half the transactions and over 60% of deal value.

Despite the headwinds created by continued economic, trade and political uncertainties, we believe that the diversity of investment opportunities across the sub sectors in the space, the availability of capital, the inexorable march to connect the world’s supply chains and the sustained competition for opportunities between strategic and financial investors in the sector will support continued growth in M&A activity.

About the data

The information presented in this report is an analysis of deals in the global transportation and logistics industry with a disclosed value of $50 million and above unless otherwise noted. Deal information was sourced from Thomson Reuters and includes deals for which targets have an SIC code that falls into one of the 56 transportation & logistics industry groups. Certain adjustments have been made to the information to exclude transactions which are not specific to transportation & logistics or incorporate relevant transactions that were omitted from the SIC industry codes.

This analysis includes all individual mergers, acquisitions, and divestitures for disclosed or undisclosed values, leveraged buyouts, privatizations, minority stake purchases, and acquisitions of remaining interest announced between October 1, 2016 and September 30, 2019, with a deal status of completed, partially completed, intended, pending, pending regulatory and pending completion and excludes all rumors and seeking buyers. Additionally, transactions that are spin-offs through distribution to existing shareholders are included.

Percentages and values are rounded to the nearest whole number which may result in minor differences when summing totals.

Contact us

Darach Chapman

Principal, Transportation and Logistics Deals Leader, PwC US

Jonathan Kletzel

Transportation & Logistics Leader, PwC US

Julian Smith

Advisor, PwC Indonesia

Tel: +62 21 509 92901

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