Report: 1Q M&A activity down in manufacturing sector
Industrial Distribution staff -- Industrial Distribution, 5/13/2008 7:36:00 AM
Merger and acquisition activity in the global manufacturing sector declined 17 percent during the first quarter of 2008, according to a report from PricewaterhouseCoopers.The financial consulting firm’s Assembling Value: Industrial Manufacturing Mergers and Acquisitions Analysis indicates that 39 deals valued at or above $50 million closed during the first quarter.
That’s a 17 percent drop from the 47 deals announced during the first quarter last year.
Those 39 buyouts are valued at a total of $7 billion, down 46 percent from $13 billion during the first quarter of 2007 and a whopping 78 percent from the heady M&A climate of the 2006 first quarter, when $31 billion worth of deals were announced.
If the first-quarter trend holds, the total value of deals this year should fall short of the $88 billion in deals last year and 2006’s $92 billion total.
Chalk it up to the dismal credit climate and the resultant lack of big-ticket deals, PWC U.S. industrial manufacturing leader Barry Misthal said.
“A shortage of large industrial manufacturing deals took a toll on deal values during the first quarter of 2008 and will likely impact deal values for the remainder of the year,” Misthal noted. “Financial investors are playing a lesser role due to higher risk premiums and a decline in debt market liquidity and it is unlikely that total and average deal values will rise to previous levels until the financing environment improves.”
Most of the deals that did close were strategic, accounting for 85 percent of acquisitions during the quarter. Financial investors made only 15 percent of the quarter’s acquisitions, compared to 33 percent in 2006 and 36 percent last year.
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