The past week has seen two major takeover deals in the global logistics market – and it might be a sign of things to come, according to the latest analysis of M&A activity by PwC.
Intersections, PwC’s quarterly analysis of deal activity in the transport and logistics sector, found that 2014 ended weakly, with the fourth quarter accounting for the lowest deal value and the second lowest deal volume of the year. “Because of 2014’s lacklustre performance, M&A volume and value remain near ten-year lows”.
The recently announced Kintetsu/APL and Japan Post/Toll deals reflect a continuation of the M&A trend identified by the report which found that Asia and Oceania accounting for approximately half of global activity in 2014 – 85 deals with a total value of $31 billion.
Europe had the second highest deal value and volume (68 deals valued at $22.3 billion), aided by two large United Kingdom deals.
But we have not seen any mega-deals in the European logistics sector since the European Commission blocked UPS’s bid for TNT in 2013.
The only substantial deal has been Dentressangle’s has completed its £452m takeover of US logistics group Jacobson in September of last year.
What could fuel a new round of M&A activity, according to PwC, is the global fall in oil prices which are now at their lowest level since 2009.
PwC believes that this decline in fuel costs will improve profitability and shore up balance sheets, thus providing additional capital for more inorganic growth through mergers and acquisitions.
And that suggests we could be in for another round of consolidation in the global logistics market.