Industrial Manufacturing M&A Deal Value Spikes in 3Q

By MDM Staff

November 10, 2009

More about: Industrial, Mergers/Acquisitions

But large industrial deals are still few and far between.

Mergers and acquisitions in the global industrial manufacturing industry showed improvement during the third quarter of 2009, according to the PricewaterhouseCoopers LLP report, "Assembling value: Third-quarter 2009 global industrial manufacturing mergers and acquisitions analysis."

Deal value increased 272% increase in the third quarter 2009 from the prior quarter. Deal activity in the third quarter showed a marked improvement, both in terms of deal volume and value, increasing from 10 deals with a disclosed value of $1.8 billion in the second quarter to 29 deals with a disclosed value of $6.7 billion in the third quarter. Year-to-date deal activity remained constrained relative to a year ago, possibly due to the lull in activity by financial investors and persistent – although improving – weakness in the capital markets.

“Particularly when looking at the pattern for industrial manufacturing M&A activity coming out of the past three recessions, which indicates that the deal environment improves as the overall economy comes out of a downturn, the third quarter does show signs that things may have turned a corner,” said Barry Misthal, U.S. industrial manufacturing leader, PricewaterhouseCoopers.

Read: Distribution M&A Market Shows Signs of Life

“Certainly the past is not always an accurate indicator of future performance, but trends coming out of past recessions, coupled with the sequential improvements in the third quarter, provide some comfort heading into 2010.”

While average deal value declined consistently throughout 2008 and during the first half of 2009, this trend saw a reversal in the third quarter of 2009 as the average deal value increased to $237 million, compared with $153 million in first half of 2009, driven primarily by the increase in total deal values in the third quarter 2009.

As the global economy continued to struggle with credit market disruption and weak demand, financial investor M&A activity in industrial manufacturing remained restrained in Q3 2009. For the year-to-date, large deal activity (defined as deals with a disclosed value of at least $1 billion) remains nonexistent, as no deals were announced during the period. There were four transactions with values above the $500 million threshold, all driven by strategic buyer interests.

To access the full report, visit PwC's industrial manufacturing industry website at www.pwc.com/us/industrialproducts.

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