| BMO
Capital Markets Releases Annual M&A Report on the North American
Transportation Industry
M&A activity
remained strong in 2006 and deal volume is expected to continue but
may be slower in the short-term due to current credit market conditions
CHICAGO,
September 6, 2007 – BMO Capital Markets, the investment
and corporate banking arm of BMO Financial Group (NYSE, TSX: BMO), has
released its annual report on overall trends in the North American transportation
industry for 2006.
The two-volume report provides
an in-depth review of mergers and acquisitions and corporate finance
activity among Transportation Industry Service
Providers and Transportation Equipment Manufacturers. The report also
looks at the level of M&A activity in various sub-sectors, including
active strategic and financial acquirers and a summary of financial parameters,
including valuation metrics.
“Overall, the M&A activity in the transportation industry
remained strong in 2006 with a total number of 253 transactions being
announced,” said Paul Hawkinson, Managing Director and Head of
BMO Capital Markets’ Commercial & Industrial Sector Group. “The
volume of activity was driven by several secular trends including the
continued outsourcing of transportation activities by corporations and
the off-shoring of manufacturing activity as corporations moved to lower
costs.”
“Private equity players were among the most active in the sector
while strategic companies made selective acquisitions to accelerate growth
and broaden service offerings,” said Ed McGuire, Managing Director
and Head of BMO Capital Markets’ Transportation Group.
He added
that given current credit market conditions, debt supporting new M&A deals in 2007 may be priced higher and larger deals may be
more affected than middle-market deals. “While in the short run
deal volume in the transportation sector may cool a bit, in the long
run we expect valuations may be impacted only slightly,” said Mr.
McGuire. “Our view is that the current market adjustments may be
sufficient to wring the excesses out of the market. We think this will
result in continued deal volume for the private equity firms, with more
competition from strategic buyers.”
Highlights of the report include:
Transportation Industry Service Providers:
- The logistics
sector accounted for almost 50 per cent of the total number of 135
M&A transactions
announced in the transportation service sector.
- Universally, the valuations in the public equity markets
for the transportation service providers turned lower in 2006. A combination
of weaker freight demand, difficult earnings comparisons and a slowing
economy drove valuations in sectors below 2005 levels.
- Financial performance across most of the sectors continued
to show improvement for 2006. However, starting in the third quarter
of
2006, the following trends began to have a negative impact on transportation
service providers: Weaker freight demand; a slowing economy and difficult
post Katrina comparisons.
Transportation Equipment Manufacturers:
- In 2006, transaction volume in the transportation equipment
manufacturing industry was up 40 per cent over 2005 with 118 transactions
announced.
- The aggregate value for transportation equipment manufacturing transactions
with reported values in 2006 was about US$15.6-billion.
- The automotive sector was the most active sector accounting
for 61 per cent of announced transactions in 2006.
- Both strategic and private equity acquirers were active in
the transportation equipment manufacturing sector in 2006, accounting
for
61 per cent and 30 per cent of transactions, respectively. Overall, private
companies accounted for the greatest proportion of acquisitions.
To request a copy of the Transportation Industry Annual
Report, or to
learn more about BMO Capital Markets’ experienced investment and
corporate banking transportation team, or to subscribe to the group’s
monthly transportation industry newsletter The Link, visit www.bmocm.com/industry/transportation About
BMO Capital Markets’ Commercial & Industrial
Group
BMO Capital Markets’ Commercial & Industrial Group has a dedicated
team of 33 investment banking professionals that provide industry expertise
and product ideas to mid-sized commercial and industrial companies. The
group’s practice is centered on seven specialized sub-sectors that
include: Transportation, capital goods, packaging, other commercial products,
chemicals, plastics and basic materials. To learn more about BMO Capital
Markets’ Commercial & Industrial Group, visit: http://www.bmocm.com/industry/us/commercial/default.aspx.
About BMO Capital Markets
BMO Capital Markets is a leading full-service North American financial
services provider, with over 2,000 employees operating in 14 North
American offices and 26 worldwide, offering corporate, institutional
and government clients access to a complete range of investment and
corporate banking products and services. BMO Capital Markets is a member
of BMO Financial Group (NYSE, TSX: BMO), one of the largest diversified
financial services providers in North America with more than US$336.7-billion
in total assets and 35,000 employees as at July 31, 2007. For more
information, visit www.bmocm.com.
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Contacts:
Kim Hanson,
Toronto, (416) 867-3996
Kevin Windorf, New York, (212) 885-4111
Chris Nardella, Chicago, (312) 461-6625
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