Automotive M&A Activity Poised for Growth in 2011, According to PwC

Global automotive deal volume remains steady in 2010, while deal value drops significantly from its record levels of 2009

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PwC

May 10, 2011, 09:03 ET

DETROIT, May 10, 2011 /PRNewswire/ -- Automotive mergers and acquisitions (M&A) activity in 2010 was driven by strategic buyers focused on strengthening business units following the global financial crisis, according to a new PwC publication Automotive M&A Insights: Driving Value. While global automotive deal volumes remained steady, disclosed deal value declined to its lowest levels in five years. In 2010, 521 deals were closed with a total disclosed value of $29.4 billion.

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Limited access to capital, strained financial position, and heightened sensitivity to risk led strategic buyers to focus on smaller deals. 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 percent of global automotive M&A activity by volume and 41 percent 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."

According to PwC, the winning automotive companies of the future will be those who capture profitable growth and achieve concentration of scale and expertise in the specific product and/or sector in which they compete. M&A can help companies to achieve a competitive advantage in the global automotive industry.

For more information on PricewaterhouseCoopers automotive deal capabilities and to download PwC's publication Driving Value: Automotive M&A Insights 2010, visit: www.pwc.com/auto.

About the Transaction Services Practice

The PricewaterhouseCoopers Transaction Services (TS) practice provides due diligence for M&A transactions, along with advice on M&A strategy and integration, divestitures and separation, valuations, accounting, financial reporting, and capital raising. With approximately 1,000 deal professionals in cities in the U.S., and a global network of over 6,000 deal professionals in 90 countries, experienced teams are deployed with deep industry and local market knowledge, and technical experience tailored to each client's situation. The transaction services team can be involved from strategy to integration and employ an integrated business approach to uncover the realities of a deal. The field-proven, globally consistent, controlled deal process helps clients minimize their risks, progress with the right deals, and capture value both at the deal table and after the deal closes. For more information, visit www.pwc.com/ustransactionservices.

About PwC's Automotive Practice

PwC's global automotive practice leverages its extensive experience in the industry to help companies solve complex business challenges with efficiency and quality.

One of PwC's global automotive practice's key competitive advantages is Autofacts®, a team of automotive industry specialists dedicated to ongoing analysis of sector trends. Autofacts provides our team of more than 4,600 automotive professionals and our clients with data and analysis to assess implications, make recommendations, and support decisions to compete in the global marketplace.

About Autofacts®

Autofacts, PwC's automotive forecasting service, is a provider of automotive market analysis, strategy development, and competitive intelligence to the world's leading vehicle manufacturers, automotive suppliers, and support organizations. Autofacts service offerings are available on-demand, for one-time purchase and through an annual subscription basis to access the on-line portal with Autofacts' proprietary data query tool. For more information regarding Autofacts, please visit their website at www.autofacts.com.

About the PwC Network

PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information.

© 2011 PwC. All rights reserved. "PwC" and "PwC US" refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate and independent legal entity.

SOURCE PwC