Its mergers and acquisitions (M&A) analysis for the fourth quarter of 2018 and the year-end found a significant decline in value of 21% compared to 2017. However, the deal value in Q4 of US$26.2bn was up by 12% on previous quarter, primarily driven by the megadeal of Hitachi acquiring ABB’s Power Systems Division for US$6.4bn.
“M&A values picked up significantly in Q418 buoyed by two significant transactions,” said Colin McIntyre, US engineering and construction deals leader at PwC. “Despite decreases in overall year-over-year activity, the underlying sector fundamentals remain strong and further supported by favourable availability of capital.”
Average deal size in 2018 was US$113.1m, representing a slight decrease of 7% from 2017. In Q4 2018, the average deal size was US$134.4m.
Three megadeals - US$5bn and over - occurred during the year with a total value of US$19.3bn. The largest was the 51% acquisition of the WestConnex Motorway for US$6.8bn by an investor group primarily led by Transurban Group.
Apart from the motorway acquisition, the year also witnessed acquisition of ABB’s Power Systems Division by Hitachi and USG Corp’s acquisition by Gebr Knauf for US$6.1bn.
At the regional level, 55% of deal value was driven by Asia and Oceania acquirers, and 67% of deal value was driven by strategic investors. The pattern carries over to target regions also, with Asia and Oceania accounting for 42% of the deal value in 2018. The UK and Eurozone’s decline in participation as a target (12.5%) in terms of deal value could be an outcome of the region’s diplomatic stance to a changing geopolitical landscape especially Brexit, said PwC.