Logistics M&A Surged to Close a Busy 2015 for Deal-Making

BN-MN499_kuehne_P_20160209160937Mergers and acquisitions in the logistics industry rebounded in the fourth quarter, capping a busy year for deals in the sector, PricewaterhouseCoopers LLP said in a new report.

The value of deals globally nearly doubled to $172.7 billion in 2015 from a year earlier, with fourth quarter deals accounting for more than 42% of deal value for the year, the consulting firm said in the report released Tuesday. For the full year, there were fewer deals in 2015 than in 2014, but the deals were much larger in terms of value, and much more international in scope.

Large-scale acquisitions such as FedEx Corp.’s $4.8 billion purchase of TNT Express NV and XPO Logistics Inc.’s $3 billion purchase of Con-way Inc. drove the average deal value up more than double to $771 million last year, the PwC report said. And cross-border deals saw the biggest spike, increasing by more than three times to $114.9 billion.

Those international deals included the acquisition by Switzerland-based logistics giantKuehne & Nagel AG of ReTrans Inc., a small U.S. intermodal specialist, and the $3.53 billion purchase by XPO Logistics Inc. of French trucker Norbert Dentressangle SA.

This year’s cross-border deal-making kicked off last month when DSV AS, a Denmark-based operator ranked in the top 10 of global logistics players, closed its $1.35 billion acquisition of U.S.-based logistics specialist UTi Worldwide Inc. Hong Kong-based Kerry Logistics Ltd. also said last month it was preparing to buy a majority stake in an unnamed U.S. freight forwarder.

The growth in deal value at the end of 2015 came after the rush of consolidation paused in the third quarter.

The PwC analysis comes as slower global economic growth is squeezing companies with increasingly international supply chains. This is leading to consolidation within the fragmented logistics and transportation industries, as companies are looking to offer more complete services across continents and, in some cases, even across different business segments.

“As strategic investors in fragmented industries such as trucking and shipping continue to follow an inorganic path of attaining growth and scale, we expect consolidation to continue, leading elevated deal values in the year ahead,” Jonathan Kletzel, the lead logistics consultant for PwC, said in a statement.

The U.S. in particular attracted high-value deals because interest rates are low and domestic companies are struggling to grow, according to the report.

Meanwhile the largest number of transactions for the quarter took place in the Asia Pacific, with 120 deals worth over $96 billion. In China, a decelerating economy also led to lower prospects for growth, and lower valuations for companies, creating attractive acquisition targets, the report said.

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