While global automotive mergers and acquisitions volumes remained steady, deal value declined to its lowest levels in five years, according to a new PwC report. In 2010, 521 deals were closed with a total disclosed value of $29.4 billion.
Limited access to capital, strained financial position, and heightened sensitivity to risk led strategic buyers to focus on smaller deals, according to the report. On the financial buyer side, while there was significant interest in the automotive sector, fewer deals materialized in 2010.
"Globalization is a motivating factor behind recent and pending transactions," said Paul Elie, U.S. automotive transaction services leader. "Automotive companies are investing in strategic deals aimed at broadening their geographic footprint and/or strengthening their technology portfolio, enhancing their ability to compete globally."
Compared to the overall global trends, both Asia and Europe observed significant increases in deal activity and value. In 2010, Asia's disclosed deal value more than quadrupled to $11 billion from 2009 levels due to a few large vehicle manufacturers transactions.
While the North American automotive industry focused on its rightsizing and turnaround efforts, the European automotive industry was very active in the global deal market for the second consecutive year, accounting for 46% of global automotive M&A activity by volume and 41% of global disclosed value.
"Automakers and suppliers are focused on localizing and expanding operations, particularly in the BRIC markets, to establish a global footprint and increase local content," said Felix Kuhnert, European automotive leader. "At the same time, well-managed suppliers are actively screening M&A opportunities to drive segment consolidation or increase their technology portfolio and capabilities."
To view the study, "Driving Value: Automotive M&A Insights 2010", click here.