All signs go – Transportation sector busy with M&A

Data InsightDealspeak 14 April

All signs go – Transportation sector busy with M&A

Overall M&A is in a slump this year, as discussed in last week’s Dealspeak. Some sectors, though, buck this trend. In the last five months, bus operator Stagecoach [LON:SGC] has had not one, but two takeover approaches – one from peer National Express [LON:NEX] and the other from sponsor DWS Group [FRA:DWS].

The annual total value of European transportation-sector M&A has trended upward in recent years, Dealogic data show. Annual total value climbed from around EUR 20bn in every year of the early 2010s – with bumper years in 2015, when investors spent EUR 49.7bn, and 2018, when they spent EUR 62.2bn – to EUR 45.8bn in 2021.

Even COVID-19, which caused major noise in deal data for most sectors the Dealspeak has explored, had no discernible effect on transportation-sector M&A. Annual total value rose from 2019 through 2021. People temporarily stopped moving, but goods still had to get around. Value this year is on pace with recent highs. With this year’s first quarter in the books, investors have put up EUR 10.3bn across 81 deals in 2022.

Planes, trains and automobiles 

By a mile, the biggest deal of the past 12 months has been the EUR 17bn acquisition last spring of toll-road operator Autostrade per l'Italia by a consortium of Cassa Depositi e Prestiti, Blackstone Infrastructure Partners and Macquarie Infrastructure & Real Assets.

In second place: the EUR 3.8bn acquisition in December of Luxembourg-based Accipiter Finance, a provider of operating leases of commercial fixed-wing aircraft, by Carlyle Aviation Group. Other notable deals include Navios Maritime Partners’ EUR 881m merger last summer with Greece-based petroleum-tanker firm Navios Maritime Acquisition, and Vauban Infrastructure Partners’ purchase last autumn of a 33% stake in rail system Metro de Malaga for EUR 250m.

Even as deals tail off in other sectors, M&A is continuing at a steady clip for transportation companies running by road and rail, by sea and air.

Government benefits

While supply-chain concerns boost overall demand for transportation assets, government-driven changes are also helping. In the announcement of its offer for Stagecoach, DWS noted the UK government’s “introduction of enhanced partnerships and potential franchising arrangements expected to drive increases in bus patronage”. It noted, too, that the government’s aim to reduce carbon emissions bodes well for bus transport – potentially with public-sector capital.

As other governments around Europe continue to cut emissions, expect a greater share of transportation-sector deals to fit a narrative of decarbonisation. Such future deals could involve Germany-based coach operator FlixBus, which is seeking acquisitions in the CEE region, or Czechia-based public-transport systems provider Passengera, which wants investment to accelerate growth.

Thanks in part to the Next Generation EU fund to recover from the COVID-19 pandemic, public largesse is also likely to spur interest in transportation assets – particularly in the Mediterranean economies expected to benefit most from the windfall. Deals ahead include the Hellenic Republic Asset Development Fund’s sale of a majority stake in the Heraklion Port Authority, and the sale of infrastructure group Atlantia [BIT:ATL], which this week received a EUR 12.7bn joint bid from Blackstone [NYSE:BX] and the Benetton family’s holding company, Edizione, having last week spurned an offer from peer ACS [BME:ACS] and PE funds Global Infrastructure Partners and Brookfield.

Plenty of traffic ahead.

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