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Mergers and acquisitions activity grows

13 Feb 14 Engineering and construction merger and acquisition (M&A) activity rebounded in the fourth quarter of last year according to a new report from PwC US.

Goetjen believes the pace will accelerate
Goetjen believes the pace will accelerate

The report, Engineering growth, an annual analysis of the global deal activity in the engineering and construction industry, says that figures bode well for increased activity in 2014.

“As the construction sector continues its path of recovery and construction companies re-evaluate growth opportunities geographically and in other segments like oil and gas and petrochemicals, we remain optimistic that the pace of dealmaking will continue to accelerate into 2014,” said Kent Goetjen, US engineering and construction leader at PwC. “Today’s engineering and construction projects are more complex than ever. As a result, the rising use of design-build contracts, and the need for technical specialisation and relationships in key growth regions are the main factors likely to drive activity, even in a tepid global economic environment.”

In the fourth quarter of 2013, the volume of engineering and construction deals valued at US$50m (£30m) or more increased to 48 transactions, totalling US$13.2bn. This was up from  41 deals worth US$10.6bn in the third quarter of 2013. There was also a slight upturn in the average deal size in the fourth quarter of 2013, to US$276m compared to the previous quarter’s US$259m.

Transactions in the construction materials category led early on in the year, continuing the trend of consolidation of cement and concrete sectors from 2012. However, home building and construction, the usual category leader, picked up in the second half with a significant mega-deal of US$1bn or more in each sub-sector.

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