PricewaterhouseCoopers Says M&A Activity Will Drive
May, 18th 2010
Automotive merger and acquisition (M&A) activity will continue to drive the fundamental changes necessary for the near-term restructuring and long-term sustainability of the industry, according to financial advisory firm PricewaterhouseCoopers LLP.
According to its publication titled, "Drive Value -- Automotive M&A Insights 2009," PricewaterhouseCoopers says the deal market will play a critical role as market participants pursue transactions with a focus on synergies, including cost savings and adding revenue to their business.
"The current deal environment is showing positive signs and presents a number of opportunities for both strategic and financial buyers who have access to financing," said Paul Elie, U.S. automotive transaction services leader, PricewaterhouseCoopers LLP.
"Companies with stronger operating models and cash positions will likely leverage M&A to develop a competitive advantage through the consolidation of scale and expertise," added Paul McCarthy, U.S. automotive strategy leader, PricewaterhouseCoopers LLP.
Automotive M&A deal values soared to $121.9 billion for 2009, up 286 percent from $31.6 billion in 2008, according to the firm. The firm states the increase in deal value was influenced heavily by the U.S. Treasury investment in the vehicle manufacturing sector, which occurred in response to a near collapse of the automotive industry. Players across the automotive value chain reacted as they sought capital infusions, shed non-core assets, renegotiated debt obligations and pursued mergers of necessity.
Despite the record high deal value in 2009, the total deal volume fell to 532 transactions, representing a three percent decline from an already weak 2008 level and its lowest point since 2004.
"As we look forward, companies are likely to increase their focus on growth and the traditional drivers of M&A -- driving economies of scale, acquiring technology and expanding their geographic and customer base," said Elie.
Automotive companies seeking long-term success will drive the deal market in 2010, by developing and executing strategies for sustainable growth and value creation, according to PricewaterhouseCoopers.