This increased activity points to signs of recovery in the industry, according to Engineering growth, a quarterly analysis of the global engineering and construction industry by PwC US.
Transactions in the construction materials category led deals in the full year in both value and volume, with 46 deals over $50m totaling $16.57bn (£9.9bn).
Last year’s overall merger and acquisition (M&A) activity in did not meet levels seen in 2011 but there were 57 deals in the fourth quarter alone totalling US$13.9bn.
Asia and Oceania remained the most active region, followed by Europe and North America.
The majority of engineering and construction transactions in 2012 were local deals, for both US targets and targets and acquirers from other parts of the world.
“With the continued elevated level of uncertainty through the end of the year, we saw many deal makers staying on the sidelines or engaging in smaller, bolt-on acquisitions,” PwC’s US engineering and construction leader Kent Goetjen. “However, as the global engineering and construction sector continues on its path of slow recovery, we remain cautiously optimistic and expect the M&A arena to follow a similar trajectory of modest growth in 2013. Growing infrastructure needs, expanding urbanization, and the need for cleaner, environmentally friendly and sustainable energy and water continue to be the driving forces of M&A activity in the sector.”
Transactions in the construction materials category led deals in the full year of 2012 in both value and volume with 46 deals over $50m totaling $16.57bn, outnumbering the construction segment, the usual leader and second in terms of volume in 2012. Multiple large and mega deals throughout 2012, including the only mega deal in the fourth quarter, involved targets associated with the construction materials segment, contributing to a 70 percent increase in value in the segment’s deals over 2011.
In the full year of 2012, there were 168 deals (with values of US$50m or more) totaling $49.3bn, compared to 181 transactions worth $73.3bn in 2011. There was only one mega deal (with value of $1bn or more) announced in the fourth quarter of 2012, and mega deal activity in 2012 remained lower than 2011 levels, largely consistent with the overall slowdown in deal making in 2012.
“M&A in the construction materials segment was largely driven by high investor interest in targets in the cement and concrete business,” said Goetjen. “Additionally, as the construction companies reevaluate growth opportunities in markets and segments farther from home, the pace of deal making is expected to pick up.”
Engineering Growth is available from www.pwc.com/us/industrialproducts
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