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Size of mergers declines in engineering and construction

29 Jul 16 Latest figures from PwC show a decline in the average size of mergers and acquisitions (M&A) in the global engineering and construction sector.

click to enlarge - global deal volume and value
click to enlarge - global deal volume and value

The quarter saw 68 deals overall, 19 of which were in the construction materials manufacturing sub-sector followed by civil engineering and home building sub-sectors with 14 deals each. The M&A deal volume for Q2 2016 remained unchanged when compared to Q1 2016 but declined marginally by 6%, compared to Q2 2015.

Deal activity by value fell both sequentially and annually in all E&C categories except for civil engineering. Civil engineering saw a 62% growth in value this quarter. Several categories also saw double-digit growth in volume but were lower in total value, indicating a trend toward lower average deal size for Q2 2016.

Five megadeals - deals greater than US$1bn - were announced in Q2 2016 with a total aggregate disclosed value of $10.2bn. There were five mega deals in Q2 2016 compared to six and eight deals in Q1 2016 and Q2 2015, respectively. The top mega deals announced in the quarter was in the USA, involving Tesla Motor’s planned acquisition of SolarCity Corporation for US$2.8bn.

There were five transactions in Q2 2016, exceeding a disclosed value of US$1bn, down from six in Q1 2016 and eight in Q2 2015. These five transactions account for 47% of the total disclosed deal value for the quarter.

Construction materials manufacturing and construction, the two largest subsectors in Q2 2016, experienced a decline in deal value both sequentially and annually.

Construction materials manufacturing saw a slight decline of 3% and 24% when compared to Q2 2015 and Q1 2016, respectively.

The construction sub-sector had a decline of 9% and 62% when compared to Q2 2015 and Q1 2016, respectively.

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