Deal Value in the Chemicals Industry Doubles Since 2006
Emerging Markets Offer New Opportunities
NEW YORK, Feb. 7, 2008 (PRIME NEWSWIRE) -- Despite an economic downturn in the U.S. economy, M&A surged in the transportation & logistics and chemicals industries in 2007, according to two M&A reports released today by PricewaterhouseCoopers. Deal volume in the transportation & logistics industry reached a 20-year high with 1,291 deals in 2007, toppling the prior record reached in 2006. Additionally, deal value in the chemicals industry more than doubled since 2006, totalling $109 billion in 2007 compared to $53 billion in 2006.
North America and Western Europe continue to be the more active regions for M&A in both the transportation & logistics and chemicals industries. However, M&A activity in emerging markets is rising. In 2007, Middle Eastern acquirers began bidding more aggressively for companies in the chemicals sector, taking part in five out of 19 deals with transaction values greater than $1 billion. Transportation deals for BRIC (Brazil, Russia, India, and China) targets jumped by 28 percent in 2007 over the prior year due to an increase in deals for targets in China and India.
"We predict that firms in emerging economies will continue to play a significant role as cross-border acquirers in the global M&A market with assistance from strong currencies, highly-valued financing sources, and additional cash from increased commodity prices," said Dean Simone, U.S. industrial products leader, PricewaterhouseCoopers.
Top line findings from each of the PricewaterhouseCoopers reports follow:
Transportation & Logistics Industry
Intersections, PricewaterhouseCoopers' quarterly report on M&A in the global transportation & logistics industry, revealed a total of 1,291 deals in 2007, a 20-year high for deal volume in this sector. Despite the rise in the volume of deals, total deal value in 2007 experienced a significant drop to $83 billion, down from the 20-year high of $164 billion set in 2006. The prevalence of large deals announced during 2006 also led to a decline in the average deal size between 2006 and 2007 ($1 billion to $426 million, respectively).
Western Europe led the way in deal volume in 2007 for deals worth more than $50 million. Transportation deals for BRIC targets announced during 2007 jumped by 28 percent over the prior year due to an increase in deals for targets in China and India. Of the 32 deals announced for BRIC targets, 18 were located in China and Hong Kong, eight of which were announced in the fourth quarter. Of the 18 deals with Chinese/Hong Kong targets, only 38 percent were cross border deals, compared to an average of 45 percent for all deals, regardless of the target's location.
Chemicals Industry
Chemical Compounds, PricewaterhouseCoopers' quarterly report on the state of transactions in the global chemicals industry, highlighted a rise in deal value, which more than doubled from $53 billion in 2006 to $109 billion in 2007. This increase was driven by a greater number of deals with transaction values over $1 billion, as well as a slight rise in deal volume which reached 819 deals in 2007. The size of these large deals also increased significantly in 2007 with three deals that were greater than $10 billion and three that were greater than $5 billion (but less than $10 billion), compared to 2006 when only one deal was greater than $10 billion.
Regional transactions, especially those of large deal value, continue to be dominated by North American, Western European and Asian Pacific organizations, while other regions tend to be active in smaller deals. In 2007, Middle Eastern acquirers changed their bidding patterns, which resulted in a shift in ownership for many high profile chemical companies. The Middle East took part in five out of 19 transactions with deal values greater than $1 billion, making up 26 percent of the total transaction value for this investment level.
About PricewaterhouseCoopers
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
About PricewaterhouseCoopers Global Transportation & Logistics Practice
PricewaterhouseCoopers' Transportation & Logistics practice provides industry-focused assurance, tax and advisory services to over 250 public and private companies.
For more information and to access the Intersections report, visit: www.pwc.com/transport.
About PricewaterhouseCoopers Global Chemical Practice
PricewaterhouseCoopers' Chemicals practice is a global network of professionals who provide industry-focused assurance, tax and advisory services to more than 200 public and private chemical companies.
For more information and to access the Chemical Compounds report, visit: www.pwc.com/chemicals.