Mergers and acquisitions in automotive industry more than double in first quarter 2018

27 April, 2018

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Mergers and acquisitions (M&A) in the automotive industry more than doubled globally during the first quarter of 2018 with overall deals valued at US$ 29.8 billion, representing a 272% hike when compared to same period of 2017. Volume increased 7% to 217 deals while average value of disclosed deals jumped 282% to US$ 455 million, according to the Q1 2018 Automotive deals report from PricewaterhouseCoopers LLP (PwC).

The increase in value and average deal size is primarily driven by two megadeals in Q1 2018 compared to zero in Q4 2017. The two megadeals were by Parts and Component Manufacturers accounting for US$ 20 billion of deal value, or 66% of all disclosed deal value in the quarter.

Asia and Oceania acquirers spent US$ 16.1 billion in Q1 2018, or 54% of disclosed deal value. The majority of deal activity were local deals.

Although, during the first quarter, M&A activity was mainly driven by upcoming regulation changes and technology advances, PwC also considers the impact of tax reform and a continued strong economy in the U.S. are factors of weight that keep the trend moving.

It's worth noting that PwC names Melrose Industries hostile takeover of GKN Plc. as the largest transaction in the first quarter, valued at US$ 11 billion. However, the UK-based manufacturer serves both the automotive and the aerospace sectors, with the latter contributing 35% of sales during last year.

Another take on the report is the lack of large deals in North America. Aside of the GKN acquisition, the biggest M&A transactions took place in Asia, such is the case for Hyundai Glovis’ US$ 8.8 billion acquisition of Hyundai Mobis stemming from regulatory reform in Korea, and the Chengdu Qianfeng Electronics' US$ 4.5 billion acquisition of Beijing Electric Vehicle Co, the largest auto-tech deal so far in 2018.

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- UK-based manufacturer GKN acquired for US$ 11 billion, including six plants in Mexico