However, the deal value in the final quarter of 2019 was up on the year’s previous quarters, reaching a total of US$24.1bn.
M&A transactions in 2019 totalled US$85.2bn, down 17% from the 2018 value of US$102.4bn and 28% from 2017’s US$119bn).
Global geopolitical tensions, combined with ongoing trade pressure coming from the US, contributed to a significant contraction of the cross-border transactions within the sector that in prior years had helped fuel M&A activity. Total cross-border M&A transactions amounted US$23.5bn, a decrease of US$20.5bn from 2018.
“M&A activity in Q4 2019 was seasonally strong fuelled by three large transactions with deal value greater than US$1bn,” PwC’s US engineering and construction deals leader Colin McIntyre. “The strength of Q4 2019 was not enough to mitigate a third consecutive year of decreasing M&A value within the sector.”
In Q4 2019, deal value increased by 49% to US$24.1bn when compared to Q3 2019.
The deal volume in 2019 declined by a mere 2% to 2,536 deals when compared with 2,592 deals in 2018. Similarly in Q4 2019, deal volume declined by 14% to 614 deals when compared with Q3 2019.
Despite sector headwinds which dampened underlying sector M&A activity in 2019, the underlying fundamentals remain strong and supportive of M&A activity, said PwC. It said that Urbanisation continues to place ever-increasing demands on ageing infrastructures, which combined with housing needs will continue to provide positive factors to drive sector growth and be a catalyst to create M&A opportunity. “Recent movements on a potential trade deal between China and the US could reduce some of the friction that has contributed to decreases in deal making within the sector,” the report added. “With record levels of available capital and strong underlying sector fundamentals, 2020 is likely to benefit from reduced trade friction and a softening geopolitical tensions.”