Click here to close now.

Welcome!

API Journal Authors: Carmen Gonzalez, Liz McMillan, AppDynamics Blog, Vormetric Blog, Elizabeth White

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
To many people, IoT is a buzzword whose value is not understood. Many people think IoT is all about wearables and home automation. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed some incredible game-changing use cases and how they are transforming industries like agriculture, manufacturing, health care, and smart cities. He will discuss cool technologies like smart dust, robotics, smart labels, and much more. Prepare to be blown away with a glimpse of the future.
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of profound change in the industry.
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of robomq.io, and Fred Yatzeck, principal architect leading product development at robomq.io, discussed how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at the same time reduce Time to Market (TTM) by using plug and play capabilities offered by a robust IoT ...
SYS-CON Events announced today that BMC 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. BMC delivers software solutions that help IT transform digital enterprises for the ultimate competitive business advantage. BMC has worked with thousands of leading companies to create and deliver powerful IT management services. From mainframe to cloud to mobile, BMC pairs high-speed digital innovation with robust IT industrialization – allowing customers to provide amazing user experiences with optimized IT per...
There will be 150 billion connected devices by 2020. New digital businesses have already disrupted value chains across every industry. APIs are at the center of the digital business. You need to understand what assets you have that can be exposed digitally, what their digital value chain is, and how to create an effective business model around that value chain to compete in this economy. No enterprise can be complacent and not engage in the digital economy. Learn how to be the disruptor and not the disruptee.
Internet of Things is moving from being a hype to a reality. Experts estimate that internet connected cars will grow to 152 million, while over 100 million internet connected wireless light bulbs and lamps will be operational by 2020. These and many other intriguing statistics highlight the importance of Internet powered devices and how market penetration is going to multiply many times over in the next few years.
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society-changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his session at @ThingsExpo, Jason Mondanaro, Director, Product Management at Metanga, discussed how you can plan to cooperate, partner, and form lasting all-star teams to change the world and it starts with business models and monetization strategies.
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will addresses this very serious issue of profound change in the industry.
Business as usual for IT is evolving into a "Make or Buy" decision on a service-by-service conversation with input from the LOBs. How does your organization move forward with cloud? In his general session at 16th Cloud Expo, Paul Maravei, Regional Sales Manager, Hybrid Cloud and Managed Services at Cisco, discusses how Cisco and its partners offer a market-leading portfolio and ecosystem of cloud infrastructure and application services that allow you to uniquely and securely combine cloud business applications and services across multiple cloud delivery models.
In his General Session at 16th Cloud Expo, David Shacochis, host of The Hybrid IT Files podcast and Vice President at CenturyLink, investigated three key trends of the “gigabit economy" though the story of a Fortune 500 communications company in transformation. Narrating how multi-modal hybrid IT, service automation, and agile delivery all intersect, he will cover the role of storytelling and empathy in achieving strategic alignment between the enterprise and its information technology.
Buzzword alert: Microservices and IoT at a DevOps conference? What could possibly go wrong? In this Power Panel at DevOps Summit, moderated by Jason Bloomberg, the leading expert on architecting agility for the enterprise and president of Intellyx, panelists peeled away the buzz and discuss the important architectural principles behind implementing IoT solutions for the enterprise. As remote IoT devices and sensors become increasingly intelligent, they become part of our distributed cloud environment, and we must architect and code accordingly. At the very least, you'll have no problem fillin...
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Opening Keynote at 16th Cloud Expo, Sandy Carter, IBM General Manager Cloud Ecosystem and Developers, and a Social Business Evangelist, d...
Converging digital disruptions is creating a major sea change - Cisco calls this the Internet of Everything (IoE). IoE is the network connection of People, Process, Data and Things, fueled by Cloud, Mobile, Social, Analytics and Security, and it represents a $19Trillion value-at-stake over the next 10 years. In her keynote at @ThingsExpo, Manjula Talreja, VP of Cisco Consulting Services, discussed IoE and the enormous opportunities it provides to public and private firms alike. She will share what businesses must do to thrive in the IoE economy, citing examples from several industry sectors.
In his keynote at 16th Cloud Expo, Rodney Rogers, CEO of Virtustream, discussed the evolution of the company from inception to its recent acquisition by EMC – including personal insights, lessons learned (and some WTF moments) along the way. Learn how Virtustream’s unique approach of combining the economics and elasticity of the consumer cloud model with proper performance, application automation and security into a platform became a breakout success with enterprise customers and a natural fit for the EMC Federation.
SYS-CON Events announced today that the "Second Containers & Microservices Conference" will take place November 3-5, 2015, at the Santa Clara Convention Center, Santa Clara, CA, and the “Third Containers & Microservices Conference” will take place June 7-9, 2016, at Javits Center in New York City. Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities.
SYS-CON Events announced today that the "First Containers & Microservices Conference" will take place June 9-11, 2015, at the Javits Center in New York City. The “Second Containers & Microservices Conference” will take place November 3-5, 2015, at Santa Clara Convention Center, Santa Clara, CA. Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities.
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal today!
In his keynote at 16th Cloud Expo, Rodney Rogers, CEO of Virtustream, discusses the evolution of the company from inception to its recent acquisition by EMC – including personal insights, lessons learned (and some WTF moments) along the way. Learn how Virtustream’s unique approach of combining the economics and elasticity of the consumer cloud model with proper performance, application automation and security into a platform became a breakout success with enterprise customers and a natural fit for the EMC Federation.