Though overall 2012 merger and acquisition (M&A) activity in the engineering and construction industry did not meet levels seen in 2011, an uptick in fourth quarter activity points to signs of recovery, according to Engineering Growth, a quarterly analysis of the global engineering and construction industry by consultant PwC US.
“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. 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,” said H. Kent Goetjen, U.S. engineering and construction leader with PwC.
In 2012, there were 168 deals (with values of $50 million or more) totaling $49.3 billion, compared with 181 transactions worth $73.3 billion in 2011. Overall 2012 M&A volume and value declined compared with 2011 levels, but the sector did see increased activity in the fourth quarter of 2012: 57 deals totaling $13.9 billion, an increase in value and volume compared with the third quarter of 2012 (31 transactions totaling $10.8 billion).
Despite the slowdown in engineering and construction dealmaking, financial investors continue to slowly gain momentum. In 2012, the participation of financial advisors was higher than the average 10-year rate of about 33 percent of financial acquirers and they were an active participant in some of the largest deals during the year, potentially suggesting signs of recovery and opportunity 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 $50 million totaling $16.57 billion, 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 (notably, cement and concrete), contributing to a 70% increase in value in the segment’s deals over 2011.
The majority of engineering and construction transactions in 2012 were local deals, for both U.S. targets and targets and acquirers from other parts of the world. Asia and Oceania remained the most active region in engineering and construction dealmaking, representing 68 deals totaling $15.09 billion in 2012, followed by Europe and North America. The United States was the most active individual nation, engaging in the largest number of deals and also tending to generate higher deal values due to the relative maturity, size, and financial stability of U.S.-affiliated dealmakers.
For a copy of Engineering Growth, visit: www.pwc.com/us/
Related Stories
| Aug 11, 2014
Air Terminal Sector Giants: Morphing TSA procedures shape terminal design [2014 Giants 300 Report]
The recent evolution of airport terminals has been prompted largely by different patterns of passenger behavior in a post-9/11 world, according to BD+C's 2014 Giants 300 Report.
| Aug 11, 2014
Will Alsop's funky 'high-rise on stilts' will be built over an apartment building in London
South London's riverfront will soon be graced by one of Will Alsop's eccentric designs: a curved apartment tower on purple stilts.
| Aug 5, 2014
Shigeru Ban-designed Aspen Art Museum will open doors to public this week
After 18 month of planning and construction, the museum will open its new Shigeru Ban-designed facility to the public on August 9.
| Aug 5, 2014
Construction economists optimistic about 2014 growth
Anirban Basu, Kermit Baker and David Crowe provided a collaborative economic forecast combining their expert economic analysis on leading, present and lagging economic indicators.
| Jul 30, 2014
Nonresidential building activity on the rise for 2015: AIA Forecast
Semiannual Consensus Construction Forecast predicts 4.9% increase this year, 8% next year, with offices and retail facilities leading the charge.
| Jul 29, 2014
AECOM's buying spree continues: Deal to acquire Hunt Construction Group in the works
The acquisition comes just two weeks after AECOM's $6 billion deal to acquire rival engineering and construction company URS Corp.
| Jul 28, 2014
Reconstruction market benefits from improving economy, new technology [2014 Giants 300 Report]
Following years of fairly lackluster demand for commercial property remodeling, reconstruction revenue is improving, according to the 2014 Giants 300 report.
| Jul 28, 2014
Reconstruction Sector Construction Firms [2014 Giants 300 Report]
Structure Tone, Turner, and Gilbane top Building Design+Construction's 2014 ranking of the largest reconstruction contractor and construction management firms in the U.S.
| Jul 28, 2014
Reconstruction Sector Engineering Firms [2014 Giants 300 Report]
Jacobs, URS, and Wiss, Janney, Elstner top Building Design+Construction's 2014 ranking of the largest reconstruction engineering and engineering/architecture firms in the U.S.
| Jul 28, 2014
Reconstruction Sector Architecture Firms [2014 Giants 300 Report]
Stantec, HDR, and HOK top Building Design+Construction's 2014 ranking of the largest reconstruction architecture and architecture/engineering firms in the U.S.
