- Value of deals announced in first quarter of 2012 bigger than in previous four quarters
- Europe to be at centre of M&A activity
- Opportunities mainly in logistics, shipping and infrastructure
2012 looks poised to be a year for renewed global activity in the Transport & Logistics sector, according to an analysis by advisory firm KPMG. After a year of subdued activity in 2011, the first quarter of 2012 saw a big increase in the value of deals announced, with a global value of 19.7 billion USD (12.3 billion GBP). The combined value of completed and announced deals for the quarter stands at 27.9 billion USD (17.4 billion GBP), bigger than in any of the previous four quarters.*
Steffen Wagner, European Head of Transport Transactions at KPMG comments:
“After a drop in transaction values in the second half of 2011, this year certainly took off to a promising start. Many companies, particularly in the logistics segment, are sitting on full coffers and are ready for increased strategic acquisitions.
“Whether or not the market will rally will depend mainly on three factors: GDP development and the general economic outlook, the M&A appetite of strategic investors and the investment pressure among financial investors.”
With the largest number of deals completed (87 completed deals with total value of 4.9 billion USD/3.1 billion GBP) Europe again looks set to be to be at the centre of M&A activity in the sector. Last year Europe was the only region globally with growing transaction volumes while North America and Asia saw a significant drop in activity.
Last year’s M&A activity in the sector was largely driven by two major transactions in the Post & Express segment, with the divestment of the TNT Express branch for 7.2 billion USD and the investment of CDC (Caisse des Depots & Consignations, a French sovereign wealth fund) of 26.3% in La Poste SA, France, a transaction valued at 2.1 billion USD.
According to KPMG, the Post & Express sector will continue to be targeted by strategic and financial investors, especially in Europe as the overall market size will likely grow in the future due to rising E-Commerce and cross-border express deliveries. Private Equity investors are also interested in acquiring companies in special niche markets like time-sensitive delivery or secure courier delivery companies with high margins and growth perspectives.
KPMG predicts more opportunities for investors in shipping, logistics and the infrastructure market.
Steffen Wagner comments: “The overall market situation for shipping companies remains difficult: The sector is struggling with overcapacities, declining charter rates and many companies operate below break even. We expect further need for consolidation in this highly fragmented shipping industry and thus a growing numbers of transaction but with small average deal sizes.”
“The logistics market is highly fragmented as well, especially in Europe. Private equity investors looking to invest in niche markets and the further need for consolidation will be the main drivers of M&A activity in this sector. Opportunities will be in temperature-sensitive transport and food logistics, pharmaceutical & chemical logistics and the transport of hazardous products.”
“The picture in the infrastructure market is a different one. Investors in this segment have been traditionally looking for safe investment opportunities and will continue to do so. Margins are usually low but cashflows are stable thus infrastructure will remain an interesting M&A market for pension funds. Further need for privatization will likely drive M&A activity in the future with some large cap transactions already in the pipeline.”
*Note to editors: All figures sourced from Thomson Financial.
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