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Industrial M&A Posts Mixed Results in 2018

Bill Koenig
By Bill Koenig Senior Editor, SME Media

Industrial merger and acquisition activity was mixed in 2018, with fewer but higher value deals, consulting firm PwC said in a report.

The value of industrial M&A deals totaled $97.4 billion last year, an 11% gain from 2017, PwC said. There were 2,330 deals in 2018, down from 2,576 the year before.

What’s more, PwC said deal making dipped in the year’s second half.

“Through the first half of 2018 deal momentum was robust and we expected deal value and volume to significantly outpace 2017,” PwC said in the summary of the report. “Deal volume significantly dropped off in the second half of 2018.”

PwC cited “geopolitical uncertainty,” slowing economic growth in the United States and China and stock market volatility for the second-half M&A falloff.

“The year was certainly a tale of two halves for industrial manufacturing deal makers, with the latter (half) causing deal makers to pause and question what is to come,” Paul Elie, PwC’s U.S. industrial manufacturing deals leader, said in a statement.

For much of 2018, the U.S. and China engaged in a trade war. The two sides currently have paused that conflict and are negotiating trade issues. However, there is also trade tension between the U.S. and other Asian nations as well as the European Union.

Largest Deal

PwC said the industrial machinery category accounted for 37% of total deal value in 2018, followed by 32% for electronic and electrical equipment. The largest industrial transaction of 2018 was Wabtec Corp.’s $11.1 billion acquisition of GE Transportation. The transaction was announced in May. The deal received approval from the U.S. Justice Department this month. Wabtec expects to complete the deal by the end of March. GE has divested units as it tries to stabilize its industrial holdings.

For 2019, PwC said it still expects industrial making to occur.

“Sound deal fundamentals continue to support a solid M&A landscape and deal making in industrial manufacturing should continue to be healthy,” the consulting firm said. “Business leaders need to continue to look for quality assets to aid in their growth strategies, especially given the slowing global economic outlook.”

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