Global Transportation and Logistics M&A Deals Insights Q2 2016

Executive Summary
With the announcement of over 50 global transportation and logistics (T&L) M&A deals in Q2 2016, the sector reported its third highest quarter by aggregate value of the last three years, exceeding Q1 2016 by over 20%.

Although the volume of deal activity was slightly below the average of recent quarters, this was more than offset by an average deal value of almost $670 million, over 25% higher than that of the last three years.

The uptick in activity was diversified across subsectors, with aggregate value increases in logistics, trucking, Passenger Ground and Passenger Air.

In terms of deal volume, Asia has been the leading geographic region for the majority of the past three years.

Its significance continued to increase in Q2 2106 as it accounted for more than 50% of both deal value and deal volume in the sector.

This was spurred by the reverse merger of Maanshan Dingtai and SF Holding (deal value $16.83 billion) which is representative of a key trend in the region where companies are seeking to access the capital markets in order to fund M&A activity.

A positive Outlook for T&L M&A
Following a relatively soft Q1, Q2 2016 has signaled a significant pickup in T&L deal activity underpinned by two key themes: The diversification of M&A activity across the subsectors and the sustained M&A activity in Asia and China in particular.

Logistics and Trucking, which have driven much of the activity over the past several quarters, have been supplemented by significant deals in the Passenger Air and Ground space such as the acquisition of Virgin America in the US, Asia Aviation in Thailand and Autopista Arco Norte SA de CV, a toll road operator in Mexico.

In China, with the middle class soaring and transportation costs declining, increased e-commerce activity has been leading companies like SF Holding to seek access to capital and increased scale.

A lengthy IPO approval process has driven SF Holding and other transportation companies to seek ‘backdoor listings’ (often reverse mergers with public companies) in order to raise capital to support future M&A.