They’re Dealing, Says PricewaterhouseCoopers

Although the merger and acquisition (M&A) deal market in the global auto industry was a bit more hush-hush during the first half (H1) of 2010 than it was in H1 2009, according to the automotive transaction services practice of PricewaterhouseCoopers, there was actually some traction in 2010—described as “a cautious uptick in deal volumes”—although there was the “lowest disclosed deal value in five years.” Of course, two big disclosures in 2009 had the U.S. government involved, so. . . . According to the firm, there were three primary areas that vehicle manufacturers and component suppliers were seeking to address via their M&A activities: Divesting of non-core businesses Bolstering core competencies Engaging in new markets or with new customers Clearly, there is a focused approach going on, and as Paul McCarthy, U.S. automotive transaction services strategy leader at the firm put it, “In the near-term, the bulk of the automotive M&A market will likely be smaller, targeted deal activity.” PRNewswire/PwC There was considerable M&A activity in Europe, which accounted for 50% of the global volume and six of the top 10 global transactions.

Although the merger and acquisition (M&A) deal market in the global auto industry was a bit more hush-hush during the first half (H1) of 2010 than it was in H1 2009, according to the automotive transaction services practice of PricewaterhouseCoopers, there was actually some traction in 2010—described as “a cautious uptick in deal volumes”—although there was the “lowest disclosed deal value in five years.” Of course, two big disclosures in 2009 had the U.S. government involved, so. . . .

According to the firm, there were three primary areas that vehicle manufacturers and component suppliers were seeking to address via their M&A activities:

  • Divesting of non-core businesses
  • Bolstering core competencies
  • Engaging in new markets or with new customers

Clearly, there is a focused approach going on, and as Paul McCarthy, U.S. automotive transaction services strategy leader at the firm put it, “In the near-term, the bulk of the automotive M&A market will likely be smaller, targeted deal activity.”

P PRNewswire/PwC

There was considerable M&A activity in Europe, which accounted for 50% of the global volume and six of the top 10 global transactions. In North America, it was primarily about rightsizing and turnarounds. In Asia there was notable activity including that in H1 2009 there was a net deal outflow while in H1 2010 a net deal inflow.

The future? PricewaterhouseCoopers U.S. automotive transaction services leader Paul Elie observed, “With the worst of the economic and credit crisis behind them, financial buyers are likely to show renewed interest in the automotive deal market. Looking ahead, we anticipate larger deals coming to fruition in 2011 as the market improves and participants jockey for global leadership.”