Welcome!

Search Authors: Elizabeth White, Liz McMillan, Jnan Dash, Shelly Palmer, Carmen Gonzalez

News Feed Item

Divestitures Continue to Drive Industrial Products M&A Activity in Third Quarter, According to PwC US

Uncertain Global Outlook, Eurozone Crisis and Slowing Growth in Emerging Markets Restrain Overall M&A Volume

NEW YORK, Nov. 8, 2012 /PRNewswire/ -- Overall merger & acquisition (M&A) activity in the global industrial products (IP) industry remained suppressed during the third quarter of 2012, as management teams remain cautious given ongoing global economic uncertainty, according to a series of quarterly M&A reports released today by PwC US.  Across the entire IP industry, there were 164 transactions worth $50 million or more totaling $81 billion in the third quarter of 2012, compared to 197 deals and $96.2 billion in total value during the same period in 2011. PwC's IP practice examined activity in the third quarter of 2012 across six sectors: aerospace & defense (A&D), chemicals, engineering & construction, industrial manufacturing, metals and transportation & logistics

(Logo: http://photos.prnewswire.com/prnh/20100917/NY66894LOGO )

Given the restrained M&A environment, industrial products companies have continued to focus on restructuring and rightsizing operations. In line with this trend, deal activity in the third quarter of 2012 continued to include a high proportion of divestitures as companies sought to eliminate underperforming operations, as well as trim their exposure to slowing economies.  For example, in the A&D sector, 71 percent of deals worth $50 million or more involved divestitures during the third quarter, largely driven by defense companies divesting their non-strategic, industrial units. 

In addition, local deals continued to represent the majority, or 55 percent, of transactions across the IP sector during the third quarter, as companies focused on consolidating operations and driving synergies.  Asia and Oceania continued to attract the highest number of deals. 

"The M&A environment across the global industrial products industry remained subdued during the third quarter, given a range of concerns including the ongoing Eurozone crisis, slower growth in emerging markets and uncertainty regarding budget issues in the U.S.," said Robert McCutcheon, U.S. industrial products industry leader for PwC.  "Strategic investors remain the primary driver of deal activity as they take advantage of their strong balance sheets and attractive deal multiples to execute their long-term expansion plans.  M&A activity will likely remain at low levels for most IP segments for the remainder of the year as management teams carefully evaluate macro-economic developments and the near-term impact on their businesses."

Mega deals (transactions worth more than $1 billion) remain below 2011 levels and overall deal activity continues to be driven by smaller transactions (less than $50 million), consistent with the second quarter of 2012. There were a total of 18 mega deals across the IP industry during the third quarter of 2012, representing only one percent of total deal volume. For perspective, the metals industry had no mega deals in the third quarter and had only two deals valued at more than $500 million.  In addition, the A&D sector also recorded only one mega deal for all of 2012 thus far and that transaction was canceled.  

The industrial manufacturing sector bucked that trend in the third quarter with six mega deals, which helped to support a surge in transaction value to $25 billion, up from $19 billion in the previous quarter.  Despite a generally challenging macro-economic climate globally, the improved financial health of many corporations, as well as growth prospects in attractive niche product and geographic markets were among the likely drivers for the acceleration in deal activity in third quarter. The chemicals industry was also active with four mega deals, growing almost threefold to $11.7 billion compared to the second quarter of 2012.

Strategic investors drove the majority of deal activity across the industry, reflecting their focus on longer-term investment initiatives, while financial acquirers largely remained on the sidelines given near-term economic uncertainty coupled with their shorter-term approach to transactions. Across all IP sectors, nearly 70 percent of deals worth more than $50 million involved strategic investors in the third quarter of 2012.  Leading the pack, strategic investors represented 86 percent of third quarter deal activity in the A&D sector, followed by 77 percent in the industrial manufacturing sector and 70 percent in the engineering and construction segment. The notable exception was in the transportation and logistics sector, where financial investors represented 43 percent of deal volume during the third quarter. 

Reduced deal flow has further bolstered company balance sheets across multiple sectors, potentially boding well for future M&A activity.  "We are seeing a considerable number of investors who are taking a wait-and-see approach to M&A, as they closely monitor global economic and geo-political trends," noted McCutcheon.  "Meanwhile, liquidity remains healthy with average cash positions increasing and debt-to-capital levels continuing to decline among many companies across multiple sectors. Given slowing growth globally, these companies may ultimately put their cash to work in new ventures, which should result in an uptick in M&A activity."

The U.S. continued to attract notable interest in the IP M&A market given a range of positive factors including a more stable economy than many other countries, modest GDP growth, a strengthening currency and the emerging benefits of increased shale gas production in multiple sectors. 

"As China's economy continues to slow down and Europe deals with the ongoing sovereign debt crisis, the U.S. has become increasingly attractive to global companies searching for quality, inorganic growth options," McCutcheon added.

Looking at select sectors, deal activity in the metals industry dropped significantly in the third quarter of 2012.  Total metals industry deal value of $3.8 billion was down from total value of $9.1 billion in the third quarter of last year, representing the lowest level in three years.  This sector M&A activity is on pace to decline by as much as 50 percent for the full year.  In addition to the impact of the uncertain global macro-economic outlook, companies are not expected to accelerate acquisitions until declining base metals prices stabilize and supply starts to keep pace with demand.

Deal activity was also particularly sluggish in the engineering and construction industry, which has continued to lag well behind that of the previous two years. Based on year-to-date activity, it remains unlikely that the segment will reach 2011 M&A levels. Conversely, deal activity in the transportation and logistics sector remained healthy despite a small drop in overall volume.  However, total transportation and logistics deal value of $15.3 billion increased from $13.6 billion in the second quarter of 2012 given an increase in mega deals during the third quarter.

About PwC's Industrial Products practice
PwC's Industrial Products (IP) practice provides financial, operational, and strategic services to global organizations across the aerospace & defense (A&D), business services, chemicals, engineering & construction (E&C), forest, paper, & packaging (FPP), industrial manufacturing, metals, and transportation & logistics (T&L) industries. For more information please visit: www.pwc.com/us/en/industrial-products

About the PwC Network
PwC firms help organizations and individuals create the value they're looking for. We're a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.

Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +.

© 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

SOURCE PwC US

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com), moderated by Ashar Baig, Research Director, Cloud, at Gigaom Research, Nate Gordon, Director of T...
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data a...
The BPM world is going through some evolution or changes where traditional business process management solutions really have nowhere to go in terms of development of the road map. In this demo at 15th Cloud Expo, Kyle Hansen, Director of Professional Services at AgilePoint, shows AgilePoint’s unique approach to dealing with this market circumstance by developing a rapid application composition or development framework.
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, phone and digital TV services to consumers primarily in rural areas.
“In the past year we've seen a lot of stabilization of WebRTC. You can now use it in production with a far greater degree of certainty. A lot of the real developments in the past year have been in things like the data channel, which will enable a whole new type of application," explained Peter Dunkley, Technical Director at Acision, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that IDenticard will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. IDenticard™ is the security division of Brady Corp (NYSE: BRC), a $1.5 billion manufacturer of identification products. We have small-company values with the strength and stability of a major corporation. IDenticard offers local sales, support and service to our customers across the United States and Canada. Our partner network encompasses some 300 of the world's leading systems integrators and security s...

ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ --  IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's platform-as-a-service. The new platform enables developers to build ap...

DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete at launch. DevOps may be disruptive, but it is essential.
"People are a lot more knowledgeable about APIs now. There are two types of people who work with APIs - IT people who want to use APIs for something internal and the product managers who want to do something outside APIs for people to connect to them," explained Roberto Medrano, Executive Vice President at SOA Software, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Nigeria has the largest economy in Africa, at more than US$500 billion, and ranks 23rd in the world. A recent re-evaluation of Nigeria's true economic size doubled the previous estimate, and brought it well ahead of South Africa, which is a member (unlike Nigeria) of the G20 club for political as well as economic reasons. Nigeria's economy can be said to be quite diverse from one point of view, but heavily dependent on oil and gas at the same time. Oil and natural gas account for about 15% of Nigera's overall economy, but traditionally represent more than 90% of the country's exports and as...
The Internet of Things is a misnomer. That implies that everything is on the Internet, and that simply should not be - especially for things that are blurring the line between medical devices that stimulate like a pacemaker and quantified self-sensors like a pedometer or pulse tracker. The mesh of things that we manage must be segmented into zones of trust for sensing data, transmitting data, receiving command and control administrative changes, and peer-to-peer mesh messaging. In his session at @ThingsExpo, Ryan Bagnulo, Solution Architect / Software Engineer at SOA Software, focused on desi...
"At our booth we are showing how to provide trust in the Internet of Things. Trust is where everything starts to become secure and trustworthy. Now with the scaling of the Internet of Things it becomes an interesting question – I've heard numbers from 200 billion devices next year up to a trillion in the next 10 to 15 years," explained Johannes Lintzen, Vice President of Sales at Utimaco, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
"For over 25 years we have been working with a lot of enterprise customers and we have seen how companies create applications. And now that we have moved to cloud computing, mobile, social and the Internet of Things, we see that the market needs a new way of creating applications," stated Jesse Shiah, CEO, President and Co-Founder of AgilePoint Inc., in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Gridstore™, the leader in hyper-converged infrastructure purpose-built to optimize Microsoft workloads, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Gridstore™ is the leader in hyper-converged infrastructure purpose-built for Microsoft workloads and designed to accelerate applications in virtualized environments. Gridstore’s hyper-converged infrastructure is the industry’s first all flash version of HyperConverged Appliances that include both compute and storag...
Today’s enterprise is being driven by disruptive competitive and human capital requirements to provide enterprise application access through not only desktops, but also mobile devices. To retrofit existing programs across all these devices using traditional programming methods is very costly and time consuming – often prohibitively so. In his session at @ThingsExpo, Jesse Shiah, CEO, President, and Co-Founder of AgilePoint Inc., discussed how you can create applications that run on all mobile devices as well as laptops and desktops using a visual drag-and-drop application – and eForms-buildi...
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core of our infrastructures. At the same time, we have old approaches made new again like micro-services...
Code Halos - aka "digital fingerprints" - are the key organizing principle to understand a) how dumb things become smart and b) how to monetize this dynamic. In his session at @ThingsExpo, Robert Brown, AVP, Center for the Future of Work at Cognizant Technology Solutions, outlined research, analysis and recommendations from his recently published book on this phenomena on the way leading edge organizations like GE and Disney are unlocking the Internet of Things opportunity and what steps your organization should be taking to position itself for the next platform of digital competition.
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
As the Internet of Things unfolds, mobile and wearable devices are blurring the line between physical and digital, integrating ever more closely with our interests, our routines, our daily lives. Contextual computing and smart, sensor-equipped spaces bring the potential to walk through a world that recognizes us and responds accordingly. We become continuous transmitters and receivers of data. In his session at @ThingsExpo, Andrew Bolwell, Director of Innovation for HP's Printing and Personal Systems Group, discussed how key attributes of mobile technology – touch input, sensors, social, and ...