Merger and Acquisition Activity Heats Up in Trucking
TORONTO — After several slow years, merger and acquisition activity is on the rise again in the Canadian trucking industry, according to PwC's Capital Markets Flash, a provider of tax, consulting and deals services.
"We're seeing companies become increasingly aggressive, not taking no for an answer as hostile activity heats up," said Nicolas Marcoux, national deals leader, PwC.
Big trucking firms are getting bigger, while many mid-sized companies are either being acquired or are struggling, PwC explained.
"Valuation is high in a 'risk-on' environment, as corporate and private equity buyers search for growth and value creation opportunities," Marcoux said.
And it’s not just trucking. Canada had a quiet first quarter (Q1), but the merger and acquisition market accelerated in the second quarter (Q2) of 2014.
Q2 2014 saw 748 deals with a total value of $45.8 billion in 91 days, which is 10 percent higher in both value and volume from Q1 and a 20-percent jump from Q2 2013.
Q2 2014 highlights:
- Deals over US$1 billion saw the biggest increase, up 10 percent year over year in volume and a 39-percent jump in value;
- Deals of US$100-500 rose with 30 percent in volume and 20 percent in value;
- Cross-border deals rose 35 percent in inbound deal value and 26 percent in outbound deal value from Q1 2014;
- Domestic deals, however, declined by 28 percent in value from Q1.
On the energy front, PwC says Russia's 30-year supply deal with China has added a new layer to international competition for liquefied natural gas projects and increases the urgency for new technology to lower the cost of production.
“Canada will need to move quickly if it wants to be seen as a major player in the market,” PwC claims.