Manufacturing M&A Activity Drops Significantly

Economic environment discourages investors

Mergers and acquisitions volume in manufacturing declined 32%, and deal value fell by more than half in 2008 as financial buyers cope with a tightened lending environment and turbulent credit markets, according to the PricewaterhouseCoopers LLP report "Assembling Value: Fourth-quarter 2008 Mergers and Acquisitions Analysis."

Overall, financial investors participated in only 37 deals in 2008, falling from 72 deals in 2007 58 deals in 2006.

"Deal activity in the industrial manufacturing sector took a hit in 2008, and we will continue to see muted M&A activity as large deals subside during this difficult financing environment," said Paul McCarthy, U.S. industrial manufacturing transaction services strategy leader at PricewaterhouseCoopers. "However, from observations of deal activity during the past year, we anticipate that the pace of industrial manufacturing deals will likely increase as the economy improves and anxieties over a global recession diminish."

Deals with a disclosed value of at least $50 million during 2008 totaled 141, down from 206 deals of similar value in 2007. Total deal value reached $39 billion in 2008, less than half of the $88 billion raised in 2007.

The last three months of deal activity during fiscal 2008 were particularly slow with only 11 mergers and acquisitions announced during the fourth quarter compared with 71 in the previous year.

In the fourth quarter, total deal value announcements totaled $3 billion, compared with $40 billion announced in the same quarter of 2007. In addition, average deal value dropped to $275 million, well below the $424 million set in 2007 and $545 million in 2006.

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