Freight and Logistics M&A Landscape – Summer 2018

The volume of M&A activity in the North American Freight and Logistics industry has remained flat since 2017, with the continuing decline in trucking activity offset by increased activity in marine, rail and air freight.

Despite a lack of large landmark deals, two strategic buyers remained active in the marine space. Kirby Corporation closed the acquisition of Higman Marine for $419 million in February and announced the acquisition of Targa Resources Corp.’s inland marine tank barge business for $69 million in May. Logistec Corporation closed the acquisitions of Pensacola Stevedore Company in May and Gulf Stream Marine for $65.7 million in March. All four acquisitions were made as marine transportation companies bounce back from a down cycle caused by overbuilding barge equipment during the shale boom. Additionally, financial buyers such as Audax Group, Corrum Capital Management, The Jordan Company and BC Investment Management Corporation (bcIMC) picked up activity near the end of H1 with acquisitions in June and July.

Consolidation within the Freight and Logistics industry continued, with 85% of acquisitions made through July 31, 2018 completed by strategic companies (including companies primarily owned by private equity investors). As the demand continues to increase for specialized trucking and “last-mile delivery” driven by e-commerce, there will likely be further consolidation in the industry as larger players look for growth in niche delivery segments.

Of the 74 transactions completed so far in 2018, 70% were completed by privately owned buyers, while 30% were completed by publicly traded companies. On average, public company share prices rose by 1.1% on announcement of an acquisition, indicating that investors continue to value and reward growth by acquisition. 

Significant uncertainty regarding international trade continues as the status of the North American Free Trade Agreement continues to be in flux and with Canada/USA relations showing unprecedented strain. Additionally, trucking capacity is expected to remain tight in North America due to lack of drivers and the implementation of electronic logging devices. The increasing average age of the driving population exacerbates the issue. Furthermore, hiring troubles are prominent in the long haul and truckload spaces, indicating the likely possibility of freight costs rising along these routes.

Sources: S&P Global Market Intelligence, investment company reports, company press releases and various news sources. 
Note: For clarification purposes, a deal is described as any closed or announced M&A transaction with percent sought greater than or equal to 50% with the target located in North America and focused on the list of industry segments.

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