The number of merger and acquisition deals announced in the global transportation and logistics sector in the third quarter remained above the pace of 2009 and is about the same as the previous quarter.


There were 31 deals in Q3 compared to 32 deals last quarter and 26 deals in Q3 2009, according to a new PricewaterhouseCooper report.

The pace of deal value in Q3, which was $12.8 billion, dropped slightly from the first two quarters of the year in which total deal value was $14.1 billion in Q2 and $16.1 billion in Q1 2010. Q3 deal value is significantly lower than 2009 due primarily to a Q4 2009 $36.7 billion acquisition, which boosted last year's figures.

"Despite several positive signs of the health of the M&A T&L deal market, including total deal value, average deal value and volume all being up compared with 2009 -- when excluding the $36 billion transaction in Q4 2009 -- these metrics have remained relatively unchanged over the course of 2010," said Kenneth Evans, U.S. transportation and logistics leader for PwC. "Due to the consistently flat rate of activity, our predominant conclusion is that recovery in T&L deal activity has paused this quarter."

Two megadeals, or deals with a disclosed value of at least $1 billion, were announced during the third quarter of 2010, which matches the pace of each of the first two quarters of the year. Both megadeals were passenger air announcements.

Trends in minority stake purchases and acquisition techniques offered more positive signals in the third quarter. Minority stake purchases declined, indicating that acquirers want, and are better able, to take controlling interests in targets. This trend also relates to the significant rise in divestitures as these transactions involve the transfer of majority interests. Another positive indicator is that deals for targets going through bankruptcy or a restructuring declined in the third quarter. These results match the expectation that the deal environment will increasingly shift away from need-based transactions and more toward transactions that are expected to support growth.

Due to increased uncertainty, notes the report, companies are structuring deals in new ways and handling them differently. Specifically, many are avoiding large, staged auctions, except in cases that involve a sizable, high-profile asset. Instead, companies are trending toward one-to-one negotiations in off-market deals, where the buyer proactively identifies and approaches the target. Additionally, T&L companies have become more cautious and diligent about what they are buying. They no longer favor diversification as a global M&A theme but rather are looking for deals that can provide new strategic opportunities.