Sunday 25th Sep 2016 - Logistics Manager

Mergers and acquisitions on the increase

Mergers and acquisitions are on the increase in the transport and logistics market, according to KPMG’s latest Transport Tracker.

It said that the first quarter of 2015 has already seen completed global transactions worth £6.7 billion, and further acquisitions valued at £6.7 billion have already been announced.

UK head of transport at KPMG, James Stamp, said: “Total deal values of transport & logistics transactions in 2014 amounted to £39.6 billion and we expect this figure to be superseded in 2015.”

The report found that purchase prices rose which meant that the average business valuation of transactions in the transport sector increased in 2014 to 11.9x of EBITDA, compared to 9.0x in 2013. This was due to the increase in strategic acquisitions and the increased appetite for takeovers of transport companies combined with low availability of suitable target companies that are for sale.

The report found that consolidation, geographical expansion and vertical specialisation “remain the predominant reasons for transactions in the sector, as evidenced by the bid by FedEx for TNT Express. This is an example of a classic geographic play to strengthen FedEx’s European ground and air network. The relatively high multiple/premium to share price suggests that FedEx sees significant synergies in this deal.”

It also highlighted the fact that M&A activity has evolved in the context of the increasing digitization of the transport industry and the strong influence of the growing e-commerce business.

“To develop new business opportunities, many large logistics companies are increasingly targeting shares into specialized IT and e-commerce enterprises.”