1Q11 TL MA Report

7/31/2019 1Q11 TL MA Report

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IntersectionsFirst-quarter 2011transportation and logisticsindustry mergers andacquisitions analysis

Special report:

Gaining a competitive

advantage by retaining top

talent through a merger

www.pwc.com/us/industrialproducts


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Welcome to the rst-quarter 2011 edition ofIntersections, PwCs quarterly analysis of mergers

and acquisitions (M&A) in the global transportationand logistics (T&L) industry. In addition to adetailed summary of M&A activity in the quarter,this edition features a special report on retainingtop talent and maintaining organizational culturethrough a merger. With M&A activity increasingacross the globe, executives are facing talentmanagement challenges, including organizational

design, integration planning, and the cultural blendbetween acquirer and target. A disciplined approachto people integration helps companies achievedesired synergies, build momentum, and instillcondence among their stakeholders.


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Special reportGaining a competitive advantage by retaining top talentthrough a merger

Companies engaged in merger and acquisition activity bynecessity face numerous integration challenges. Among themare the complexities related to achieving synergies and cost

reductions and accessing new markets to sustain growth.With so much at risk, talent issues are too often overlooked.And yet, the effective handling of cultural concerns,compensation issues, and retention of pivotal talent can bevital to the success of the newly combined organization.

Merger integration involves effectively managing multiplepriorities. A staggering 70% of deals fail to deliver theirintended benets, often because cultural and people issuesare mismanaged.1 As a result, companies are becomingincreasingly aware that M&A value creation, strategicgrowth, and sustainable business success can hinge on thehuman side of deal making and integration.

With about $84 billion worth of deals in 2010, as comparedwith $71.4 billion in 2009, the transportation and logisticsindustry is enjoying a healthy period of M&A activity andmore deal activity is expected in 2011, with potential for acontinuing focus on passenger, rather than freight,transportation deals2 and an emphasis on expansion in LatinAmerica and Asia.3

T&L companies have special relationships with theiremployees and customers. So missteps in this area canquickly lead to low employee morale and signicant lossof revenue.

The implications of organizational change

Major change in the workplace can cause fear anduncertainty among employees. When organizational changeprograms fail, it is largely because employees feel excludedfrom the process and end up lacking the motivation, skills,and knowledge to adopt new systems and procedures.

These issues come to the forefront during integration. Onecompany, responding to a survey of participants in therecent M&A and Human Capital Roundtable hosted by PwC,reported beginning its retention campaign by posing a keyquestion to incoming employees: Do you see a future foryourself at this company?4

1 When two become one, Hourglass, PwC, December 2010

2 Intersections, PwC, 2010

3 Growth reimagined: Transportation & Logistics industry summary, rom14th Annual Global CEO Survey, PwC, 2011

4 Talking about the people side o M&A, PwC, 2010

Acquisitions for talent

Companies traditionally have pursued deals to achieve

extensions of product and service offerings or expansion intonew geographies. Now talent is becoming a chief reason forM&A activity. Acquisitions often are made specically toexpand the talent pool or gain new capabilitiessecuring aninnovative technology and the talent behind it. Withincreased spending in highly technical areas, companies areoften seeking professionals with very specic skill sets.

These employees are innovators, frequently critical to thebuilding of products and services uniquely identied with theorganization being acquired.

Keeping pivotal talentThe T&L industry has expanded in the major markets as wellas in the BRIC countriesBrazil, Russia, India, and Chinaand is seeking additional growth in the booming emergingmarkets of Vietnam, Indonesia, South Africa, Turkey, andArgentina. Finding, keeping, and motivating employees whohave the right skill sets has become a top corporate priority tosustain this growth; 43% of the 60 T&L CEOs in 31 countriesresponding to the PwC 14th Annual Global CEO Surveyreported plans for revising their people policies to boostemployee engagement and retention. Nonnancialincentives gured heavily into their strategies.

Survey respondents cited identifying and retaining top talentis essential to successful integration efforts and a primaryaspect of the due diligence process, according to PwCresearch. The acquiring company should dene eachemployees importance to the business relative to thetransition and beyond. The company should make anassessment regarding which employees it needs for short-term transition and long-term value creation. When deningthese needs, companies examine three levels of criticality:

Strategically criticalEmployees most essential to theongoing operations of the newly combinedorganizationtypically, top executives, key business

unit leaders, and key individual contributors.

Integration criticalEmployees essential to theintegration effort.

Knowledge-transfer criticalEmployees with specializedknowledge essential to the transfer of ongoinginformation and know-how.


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Investing heavily in pivotal talent can be a source of majorcompetitive advantage. Pivotal talent comprises the game-changing employees whose performance can make or breakthe bottom line. They are well positioned to add the greatest

value and have the greatest impact on the future success of acompany.

In their efforts to retain pivotal talent, companies areaugmenting discussions about salary and incentives withinformation regarding the shape of the corporate culture. Forexample, should the new organization be one of learning andempowerment or process discipline?

Adding urgency to concerns regarding retention is an issueon the near horizon for railroads and trucking companies:the aging workforce. A high percentage of employees in theseindustries are nearing retirement, according to statistics from

the American Trucking Association (ATA) and theAssociation of American Railroads (AAR). Truckingcompanies experienced a driver shortage of about 180,000 in2010, with an expected shortage of about 500,000 in 2011,according to one analysis.5 Nearly half of the workforce of theCanadian National Railway Co. plans to retire by 2015,according to the organizations CEO.6

Bridging cultural differences

Nearly half of the companies attending the M&A and HumanCapital Roundtable reported that cultural alignmentbridging the potentially value-destroying cultural differencesbetween acquirer and targettakes a full calendar year toachieve. The necessity for insight into cultural differences iseven more crucial when the two organizations are based indifferent countries.

As a result, companies are focusing heavily on:

Assessing the cultural compatibility between the targetand the acquirer.

Developing a culture integration roadmap in the rst 30days, or even before close if there is sufcientinformation about the two organizations

cultural compatibility. Holding the C-suite members accountable for sponsoring

and leading culture change, while empowering functionsand local teams to adapt and begin culture integrationprograms.

5 Improving economy squeezes truck driver supply,by A. Ananthalakshmi, The Economist, April 21, 2010

6 Canadian National May Hire 10,000 Over Five Years as Rail WorkersRetire, by Frederic Tomesco, Bloomberg, July 7, 2010

Launching an effectivecommunications plan

A solid communications plan is paramount during

integration. Continual communications about theacquisitions status and the multiple cultural and other issuesthat employees should face are integral to a satisfactorytransition in which the company retains valuable talent andprevents productivity slowdowns. In such an uncertainenvironment, employees require communications that areregular and accurate, including clarity around leadership, toavoid misinformation.

Managing people and talent issues during and after mergersand acquisitions comes with its own set of challenges. Failureto properly meet these challenges can result in:

Reduced employee morale

Employee exodus

Stakeholder risk

Loss of valuable intellectual property

Continuity concerns

Ultimately, adversely impacted deal value

Companies that merge successfully strive to understand andempathize with the emotional and nancial impact onemployees facing major workplace changes. Often employeesface revisions in their roles, relocations, and potentialcultural conicts. Acquirers can provide salary and other

incentives robust enough to appeal to those professionals ofgreatest value to the organizationduring the transition andgoing forward. Companies that successfully employ thesestrategies can increase their prospects for achieving mergersand acquisitions that bring the intended results, including apost-merger integration that proceeds smoothly from DayOne.


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The number of deals announced in the rst quarter of 2011approximated the pace of last year, but total value was lower.This decline was mostly driven by the absence of mega deals(deals with a disclosed value of at least $1 billion) for the

quarter compared with 14 such transactions announcedduring 2010.

This quarter seemed to be an anomaly in the recovering dealmarket of the last several quarters. Deal sizes were smallerand valuations declined. However, both of these trends seemlikely to reverse with freight and passenger volumescontinuing their improvement. We base this conclusion onour examination of value and valuation trends post-recessionover the last several business cycles.

Even though there were no mega deals this quarter, it isinteresting that several of the largest deals involved

transportation infrastructure. Infrastructure investment wasa theme of the previous quarter as well, and we expectinterest in these assets to continue because of theirpredictable returns and the potential to use privatization toaddress scal pressures.

Shipping and logistics activity picked up, accounting for fourof the top ve deals this quarter. Logistics M&A should likelysee a boost later this year with the planned TNT spinoff. Incontrast, the passenger air mode may not be as active,

particularly as it concerns Western carriers, because of thecurrent focus by many large industry players on integratingrecent acquisitions.

Asia was the most active region this quarter, which is likelyrelated to the size and growth rates of its economies. Weexpect the importance of Asia as a driver of overall dealactivity to continue, supported by the prevalence of emergingmarket nations that tend to have more fragmentedtransportation sectors.

The deal market this quarter can be described as smaller butstill active. This is likely to change over the balance of 2011.

Buoyed by accommodative capital markets, nancialinvestors remain interested in the sector, and strategicinvestors have continued to improve their liquidity.Accordingly, we are optimistic that deal ow over the fullyear should be robust by historical standards.

PerspectiveThoughts on deal activity in the rst quarter of 2011

Commentary

Quarterly T&L deal activityMeasured by number and value o deals worth $50 million or more

2008 2009 2010 2011

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

Numberof deals

42 50 49 23 14 26 33 36 33 38 48 37

Total deal value($ billions)

34.4 19.4 22.6 5.6 4.8 8.1 52.8 17.3 14.2 16.9 36.4 8.2

Average deal value($ billions)

0.8 0.4 0.5 0.2 0.3 0.3 1.6 0.5 0.4 0.4 0.8 0.2


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Smaller targets temper deal value bottomline for T&L companies

M&A activity in the transportation and logistics sector

generally continued its recovery from the recession duringthe rst quarter of 2011, with the number of deals announcedapproximating the pace of deals last year and exceeding thelevel of the year prior. However, the recovery in deal valuetook a step back this quarter as small and middle-marketdeals dominated. This change contributed to a decline inaverage deal value.

0

40

80

120

160

Number of deals with US targets and/or acquirers

Number of deals excluding deals with US targets and/or acquirers

Number of deals

1Q1120102009

Deal activity by number of deals

Measured by number of deals worth $50 million or more

Numberofdeals

9686

10

155

129

2637 34

3

0

20

40

60

80

100

Total deal value for deals with US targets and/or acquirers

Total deal value excluding deals with US targets and/or acquirersTotal deal value

1Q1120102009

Deal activity by total deal value

Measured by value of deals worth $50 million or more

US$

billions

71.4

30.4

41.0

84.9

72.9

12.08.2 7.4

0.8

0%

1%

2%

3%

4%

5%

1Q11

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

Transportation & logistics deal activity relative to all M&A deals

Measured by value and number of all deals

Deal value

Percen

tageo

fM&Adea

lun

iverse

Number of deals

In short, we would characterize the transportation andlogistics deal market as fairly active but with a focus onsmaller transactions. An examination in the nearby chart ofthe sector deal volume and value relative to all global mergerand acquisition activity supports this smaller yet still activeinterpretation.

Looking forward, a recovery in deal totals is expected tocontinue but note that 2010 was a very robust year for T&Ldeal activity, which should make year-over-year comparisonsseem less robust. In addition, 2010 featured a large jump inthe number of deals from the year before. The increase in2010 value over the year prior is even more signicantconsidering it represents a much broader base of deals thanin 2009, when the Burlington Northern railroad acquisitionaccounted for more than half of deal value announced. So weexpect a high level of deal activity this year but note that, atthis time, it seems more likely that deal volume, rather thanvalue, should match 2010 levels.


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Deal valuations decline

Deal valuation, as measured by value/EBITDA, declinedduring the rst quarter to near a 10-year low. This drop was

somewhat surprising in light of the continued level of dealactivity, and the low total does not seem likely to persist. Asindicated in the nearby chart, multiples had a similar rise andthen dip after the 2001 recession. They then increasedthrough the economic expansion as they also did followingthe 1991 recession. Therefore, if the economic recoverycontinues, we would expect to see a rise in deal valuationgoing forward.

In addition, the low proportion of targets in restructuringor bankruptcy for the quarter signies that distressed dealsremain less common. Accordingly, valuation multiples aremore likely to expand than contract over the rest of 2011.

0

2

4

6

8

10

1Q1120102009

Deal valuation by median value/EBITDA

Measured by value/EBITDA for deals worth $50 million or more

Deal value/EBITDA: 10-yr. median = 7.7x, 5-yr. median = 8.1x

Medianvalue/EBITDA

6.2

8.6

6.6

0

2

4

6

8

10

1Q11

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Historical deal valuation by median value/EBITDA

Measured by value/EBITDA for deals worth $50 million or more

Medianvalue/EBITDA

US recession

0%

2%

4%

6%

8%

10%

1Q1120102009

Acquisition techniques

Measured by percentage of deals worth $50 million or more

Bankruptcy Restructuring Tender offer

2%

1% 0%

3%

8%

2%

4%

5%

6%


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Shipping, logistics companies see greatestdeal movement in T&L industry

Shipping and logistics targets have become more popular. In

fact, four of the ve largest deals announced this quarter fallinto these modes. Looking forward, shipping could remain apopular mode for M&A because of lingering concerns aboutovercapacity as demand recovers. It is more difcult to saywhether the shift toward logistics targets may also continue.However, the planned spinoff of TNTs express business andthe potential interest in the spun-off unit as a takeover targetcould drive a focus on logistics targets in future quarters.

Passenger air M&A may take a breather for the next fewquarters with a number of the largest global players, such asBritish Airways-Iberia, United-Continental, Southwest-AirTran, and LAN-TAM, focusing on integration. In addition,

improved airline protability could increase the regulatoryhurdle for getting these deals in Western markets approved.

0%

20%

40%

60%

80%

100%

Other

Rail

Trucking

Logistics

Passenger ground

Shipping

Passenger air

1Q1120102009

Deals by transportation & logistics mode

Measured by value of deals worth $50 million or more

11%

11%

16%

54%

16%

28%

35%

8%

3%

2%

2%

1% 4%

3%

9%

36%

6%

12%

34%

8%

Note: Columns may not total 100 because of rounding.


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Deal activity by investor group

Measured by number of deals worth $50 million or more

0%

20%

40%

60%

80%

100%

Financial investors

Strategic investors

1Q1120102009

39.6%

60.4%

41.3%

58.7%

45.9%

54.1%

T&L companies build cash

In previous reports we have noted that acquirers were able touse the recession to focus on internal initiatives, such as cost

reduction, and are now better positioned to engage in M&Athanks to their strengthened balance sheets. This trendcontinued during the most recent quarter as top globaltransportation and logistics companies increased their cashpositions signicantly compared with the last several years.

0.0

0.4

0.8

1.2

1.6

2.0

2.4

2.8

Most recent quarter1 Year ago2 Years ago

Liquidity Cash and equivalants

Measured by average of top 50 global T&L public competitors

Source: Company reports

$

billions

1.51

1.97

2.41

Financial investor activity grows

We have previously indicated that healthier capital marketswould likely lead to an increase in nancial investorparticipation, and this held true during the most recentquarter. In fact, the largest deal of the quarter, the ArcusInfrastructure Partners acquisition of Forth Ports, involved anancial investor.


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Top 5 1Q11 deals

Monthannounced

Targetname

Targetnation

Acquirername

Acquirernation

StatusValue oftransactionin US$ billions

Category

Mar Forth Ports PLC UnitedKingdom

ArcusInrastructure

Partners

UnitedKingdom

Pending 0.93 Shipping

Mar Vantec Corp Japan Hitachi Ltd Japan Pending 0.66 Logistics

Mar Arcapita BankBSCUndisclosedJoint Ventures(2)

Belgium PublicStorage Inc

Belgium Completed 0.59 Logistics

Mar K-SeaTransportationPartners LP

UnitedStates

Kirby Corp UnitedStates

Pending 0.57 Shipping

Mar Gobierno del DistritoFederalPeriericoSur Tollroad

Mexico Investor Group Mexico Completed 0.52 Passenger ground

Mega deals

Mega deals in 2010 (deals with a disclosed value of at least $1 billion)

Monthannounced Targetname Targetnation Acquirername Acquirernation Status

Value of

transactionin US$ billions

Category

Dec Plus ExpresswaysBhd

Malaysia Jelas UlungSdn Bhd

Malaysia Pending 8.30 Passenger ground

Jan Japan Airlines Corp Japan ETIC Japan Completed 8.17 Passenger air

Oct Plus ExpresswaysBhd

Malaysia Investor Group Malaysia Intended 7.46 Passenger ground

May ContinentalAirlines Inc

UnitedStates

UnitedContinentalHoldings

UnitedStates

Completed 3.69 Passenger air

May Transurban Group Australia Investor Group Canada Withdrawn 3.68 Passenger ground

Aug TAM SA Brazil LAN AirlinesSA

Chile Pending 3.43 Passenger air

Nov Eversholt Rail Group UnitedKingdom

3i Inrastruc-ture PLC

UnitedKingdom

Completed 3.42 Rail

Nov HS1 Ltd UnitedKingdom

Investor Group Canada Completed 3.40 Rail

Mar Arriva PLC UnitedKingdom

DeutscheBahn AG

Germany Completed 2.43 Passenger ground

Sep OOO Primorskiytorgovyi port

RussianFed

Kadina Ltd RussianFed

Completed 2.15 Shipping

Oct La Poste SA France France France Pending 2.11 Logistics

Dec DP WorldAustralia Ltd

Australia Citigroup Inc UnitedStates

Completed 1.48 Shipping

Sep Odebrecht TransportParticipacoes SA

Brazil Fundo deGarantia doTempo de

Brazil Completed 1.11 Passenger ground

Sep AirTran Holdings Inc UnitedStates

SouthwestAirlines Co

UnitedStates

Completed 1.04 Passenger air


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Infrastructure focus continues inlargest transactions

No mega deals, dened as deals with a disclosed value above

$1 billion, were announced during the quarter. This contrastswith the relative urry of mega deals announced during thefourth quarter of 2010. However, several themes from thefourth quarter carried over into 2011 as they pertain to thelargest deals of the quarter.

A major fourth-quarter mega-deal theme was theinvolvement of nancial investors and interest ininfrastructure deals. Notably, the largest deal in the rstquarter of 2011, the $932 million acquisition of Forth Portsby Arcus Infrastructure Partners, had both of thesecharacteristics. Forth Ports is the last publicly traded UK portoperator, and the Arcus offer was accepted after several

previous bids were rejected because of price. In addition, thefth-largest deal announced this quarter, the $520 millionconcession to build and operate the Periferco Sur Toll Road inMexico City, also involved an infrastructure target.

The characteristics of the rest of the top ve deals this quarterwere more varied. The second-largest deal announced duringthe rst quarter was the $657 million acquisition of logisticsservice provider Vantec Corp. by Hitachi Transport.

Hitachi Transport has been active as a consolidator oflogistics companies with multiple acquisitions over the lastyear, and its acquisition of Vantec, which focuses ontransporting auto parts and nished vehicles, would

reportedly make Hitachi Transport the fth-largest logisticsrm in Japan, excluding Japan Post Service Co.

Rounding out the top ve are the third-largest deal of thequarter, the $586 million divestiture of Arcapita Bankscontrolling interest in two self-storage joint ventures tominority investor Public Storage Inc., and the fourth-largestdeal of the quarter, the $573 million merger between KirbyCorp. and K-Sea Transportation Partners. The latter deal isnoteworthy because Kirby has acted as a consolidator in theshipping industry and because it signals the potential forshipping M&A to drive future deal totals.

Mega-deal activity came to a halt during the rst quarter, yetthe outlook for deals of this size remains positive. Whiletransportation infrastructure deals should likely contribute tomega-deal activity this year, key factors are in place thatwould also support mega-deal announcements outsidethis category.


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Companies turn to in-countryconsolidation; Asian acquirers most active

The regional distribution of transportation and logistics dealactivity during the rst quarter indicates that acquirersmainly were focused on consolidating local markets. In fact,these deals accounted for more than 81% of deal volume, amarked increase from the previous two years.

The Asia and Oceania and UK and Eurozone regions werethe most active as measured by both value and number of

Global transportation and logistics M&A activityMeasured by number and value o deals worth $50 million or more (1Q11)

EuropeLocal8 deals, $2.4 billionInbound5 deals, $0.8 billionOutbound2 deals, $0.3 billion

Asia and Oceania

Local13 deals, $2.3 billionInbound1 deal, $0.1 billionOutbound3 deals, $0.3 billion

North AmericaLocal6 deals, $1.9 billionInbound0 deals, $0.0 billionOutbound2 deals, $0.5 billion

South AmericaLocal3 deals, $0.5 billionInbound1 deal, $0.2 billionOutbound0 deals, $0.0 billion

Regional analysis

deals. Looking forward, Asia and Oceania may lead regionaldeal totals by acquirer because of the aggregate size ofeconomies there. In addition, local-market deals in thisregion could be driven by the preponderance of emergingmarkets, where transportation industries are likely to berelatively fragmented.

Inbound deals to Asia could increase because of interest inthe faster-growing economies in this region, and NorthAmerica could see more inbound attention because ofcontinued weakness in the US dollar.


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Asia & Oceania UK & Eurozone Europe ex-UK & Eurozone South America Africa/UndisclosedNorth America

Regional distribution of deals by acquirer region

Measured by number of deals worth $50 million or more (1Q11)

16.2%

10.8%

21.6%

8.1%

43.2%

0%

Regional distribution of deals by target region

Measured by number of deals worth $50 million or more (1Q11)

24.3%

10.8%

16.2%

10.8%

37.8%

0%

Regional distribution of deals by acquirer region

Measured by value of deals worth $50 million or more (1Q11)

28.0%

4.8%

29.8%

5.7%

31.8%

0%

Regional distribution of deals by target region

Measured by value of deals worth $50 million or more (1Q11)

34.3%

23.6%

7.9%

29.3%

4.8%

0%


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With M&A activity steadily increasing across the globe, many companies are facing complex talent-managementchallenges. A number of people issues need to be addressed, including organizational design, integration planning, and thecultural t between the acquirer and the target.

M&A transactions often fail to achieve their desired results for a variety of reasons. Companies can greatly enhance thesuccess of their deals by properly understanding, addressing, and resolving important concerns related to these issuesduring the due diligence stage.

How PwC can help

PwCs People and Change (P&C) practice supports clients by using interviews and surveys to conduct cultural assessmentsto help identify critical issues during merger integration.

PwC helps companies:

PwC spotlight

Use a culture tool that assesses the operational norms of

the organizations coming together and identies howthe norms might affect the integration. The goal is tomap the differences between the operating styles,cultural drivers, and HR policies and practices of thecompanies to give the acquirer a clear picture of the sizeof the gulf between the organizations and decrease anycultural roadblocks to integration progress.

Hold workshops with each organizations senior teamsand agree on an integration culture, a process that helpsthe teams learn to respect each others differences andto start to speak the same language.

Build an elite integration team, relocating starperformers from their usual roles to work withleadership and an effective integration managementofcecompanies can no longer afford to choosemembers of their integration teams based solely onavailability.

Execute a strong, clear communications strategy byproviding the right communications at the right time,and accounting for different levels of employeeunderstanding of the changes. Steady communication isvital, even when there is no major news to announce, asa critical element in combating the distractions andanxiety that result from an integration effort.

Determine whether there are likely to be any signicant

employee-related costs.

Organizations considering a merger or acquisition should

devote appropriate time and resources to merging thecompanies cultures, HR policies and processes, andorganizational reporting relationships. PwCs disciplinedapproach to delivering people integration helps companiesachieve early wins, build momentum, and instill condenceamong stakeholders. PwC takes a proactive approach tohelping clients focus on the right things at the right times,thereby enhancing the value of the deal.

PwCs integration processes support client integration teamsand supplement them with experienced professionals wholl resource and technical gaps as needed.


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T&L company case studyIntegrating cultures through a shared work style

T&L company expandsits global footprint Issue

When a US-based T&L company extended its reach beyond theborder, it needed to learn more than a new language or two.Suddenly, by acquiring a Europe-based company, the operator

became a global logistics provider with several billion dollars inannual revenue and thousands of employees operating in 30countries. It needed to transform itself from a domestic company toa global onequicklyand integrate multiple organizationalcultures and ways of thinking.

Action PwC worked with the client to develop a 100-day communicationsplan to inform employees, customers, and shareholders about thebusiness combination, telling them about the work ahead.

We also conducted a thorough cultural assessment to determinehow people conducted their work in different business units andgeographic areas of the companies, looking at the implications forbehaviors, processes, and systems. During this assessment, wehelped senior leadership engage employees in conversations aboutintegration, nding a common way of working and developingmetrics that would help the business measure performance andproductivity around the globe.

We helped the client develop a framework for goals, objectives, andbehaviors to guide both corporate actions and individuals. We alsoworked with the client to issue daily communications and updates,using new and traditional media.

Impact With PwCs help, the client quickly transformed itself into a globalorganization that embraces many cultures, yet focuses on sharedbusiness objectives and understands the importance of collaborationand a common work style. Employees felt a greater sense ofownership because they were engaged in discussions withleadership as changes were made.


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Deep transportation and logisticsexperience

PwC provides advisory, assurance, or tax services for more

than 93% of the transportation and logistics companieslisted on the Fortune 500. Our Transportation & Logisticspractice is composed of a global network of approximately4,900 industry professionals who service nearly 300 publicand private companies around the world. Central to thesuccessful delivery of our services is an in-depthunderstanding of todays industry issues and ourcommitment to delivering economic value throughspecialized resources and international leading practices.Our highly skilled team encourages dialogue regardingcomplex business issues through active participation inindustry conferences and associations, such as the AirTransport Association, American Trucking Association,

American Railroad Association, and European LogisticsAssociation.

Quality M&A deal professionals

PwCs Transaction Services practice consists of more than6,500 dedicated deal professionals worldwide. The depth oftheir industry and functional experience enables them to

PwC experience

Asia

North America & the Caribbean5,000 Industrial Products professionals420 Transportation & Logistics industry professionals

South America

2,300 Industrial Products professionals280 Transportation & Logistics industry professionals

Europe14,200 Industrial Products professionals2,330 Transportation & Logistics industry professionals

Australia & Pacific Islands


8,300 Industrial Products professionals1,500 Transportation & Logistics industry professionals

Middle East & Africa


advise clients regarding factors that could affect a transactionacross the deal continuum. From initial due diligence andevaluation to preparation for Day One and post-close mergerintegration, our teams are committed to capturing value

throughout the deal process and achieving our clientsobjectives. These functional areas include, but are not limitedto, sales and marketing, nancial accounting, tax, humanresources, information technology, risk management, andsupply chain. Teamed with our Transportation & Logisticsindustry practice, our deal professionals can bring a uniqueperspective to your transaction, addressing it from a technicaand industry point of view.

Local coverage, global connection

In addition to global transportation and logistics resources,our team is part of a large Industrial Products group thatconsists of more than 32,000 professionals, includingapproximately 17,000 providing assurance services, 8,300providing tax services, and 7,000 providing advisory services.This expands our global footprint and enables us toconcentrate efforts in bringing clients a greater depth oftalent, resources, and know-how in the most effective andtimely way.


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Contacts

Global T&L LeaderKlaus-Dieter Ruske+49.211.981.2877

[email protected]

Global T&L Advisory LeaderBert [email protected]

United Kingdom T&L LeaderClive [email protected]

Central and Eastern Europe T&L LeaderNick [email protected]

Brazil T&L LeaderLuciano Sampaio+55 11 3674 [email protected]

China-Hong Kong T&L LeaderAlan [email protected]

Australia T&L LeaderJoseph [email protected]

Middle East T&L LeaderAlistair Kett+971.0.2694.6831

[email protected]

Global Logistics and Post CoordinatorKenneth H. [email protected]

Global Rail and Infrastructure CoordinatorJulian [email protected]

Global Shipping and Ports CoordinatorSocrates [email protected]

Global Airlines and Airports CoordinatorMartha Elena [email protected]

Global T&L Business Development and MarketingPeter [email protected]

Global T&L Knowledge ManagementUsha [email protected]

PwC Transportation & Logistics practice

US T&L Industry LeaderKenneth H. Evans+1.305.375.6307

[email protected]

US T&L Advisory LeaderChuck Marx+1.602.820.7801 [email protected]

US and Global T&L Tax LeaderMichael J. [email protected]

US T&L Transaction Services PartnerDana [email protected]

US T&L Transaction Services DirectorRichard E. [email protected]

US T&L DirectorBryan Terry+1.678.431.4676 [email protected]

US T&L Senior ManagerDavid Mandelbaum+1.646.471.6040 [email protected]

US T&L Assurance Senior ManagerJeffrey J. Simmons+1.214.979.8606

[email protected]

US Industrial Products DirectorNeelam [email protected]

US Industrial Products Marketing ManagerDiana Garsia+1 [email protected]

US Industrial Products Sector AnalystTom [email protected]

US Research AnalystMichael [email protected]

Editorial ContributorPhilip [email protected]


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Contacts

PwC Global Transaction Services practice

Global Transaction Services LeaderColin McKay+1.646.471.5200

[email protected]

US Transaction Services LeaderMartyn [email protected]

Europe Transaction Services LeaderPhillippe [email protected]

Asia-Pacic Transaction Services LeaderChao Choon Ong+65.6236.3018 [email protected]

US Transaction Services, AssuranceBrian [email protected]

US Transaction Services, TaxMichael [email protected]

US Transaction Services, Merger IntegrationDavid [email protected]


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Methodology

Intersections is an analysis of mergers and acquisitions in theglobal transportation and logistics industry. Information wassourced from Thomson Reuters and includes deals for whichtargets have primary NAICS codes that fall into one of the

following NAICS industry groups, NAICS industries, ornational industries: scheduled air transportation;nonscheduled air transportation; rail transportation;deep-sea, coastal, and Great Lakes water transportation;inland water transportation; general freight trucking;specialized freight trucking; urban transit systems;interurban and rural bus transportation; taxi and limousineservice; school and employee bus transportation; charter busindustry; other transit and ground passenger transportation;support activities for air transportation; support activities forrail transportation; support activities for watertransportation; other support activities for roadtransportation; freight transportation arrangement; other

support activities for transportation; postal service; localmessengers and local delivery; general warehousing andstorage; refrigerated warehousing and storage; otherwarehousing and storage; and process, physical distribution,and logistics consulting.

This analysis includes all individual mergers and acquisitionsfor disclosed or undisclosed values, leveraged buyouts,privatizations, minority stake purchases, and acquisitions of

remaining interest announced between January 1, 2007, andMarch 31, 2011, with a deal status of completed, intended,partially completed, pending, pending regulatory approval,unconditional (i.e. initial conditions set forth by the acquirer

have been met but deal has not been completed), withdrawn,seeking buyer, or seeking buyer withdrawn. The term deal,when referenced herein, refers to transactions with a disclosedvalue of at least $50 million unless otherwise noted.

Regional categories used in this report approximate UnitedNations (UN) regional groups as determined by the UNStatistics Division, with the exception of the North Americaregion (includes North America and Latin and Caribbean UNgroups), the Asia and Oceania region (includes Asia andOceania UN groups), and Europe (divided into UnitedKingdom plus Eurozone and Europe ex-UK and Eurozoneregions). The Eurozone includes Austria, Belgium, Cyprus,

Estonia, Finland, France, Germany, Greece, Ireland, Italy,Luxembourg, Malta, the Netherlands, Portugal, Slovakia,Slovenia, and Spain. Oceania includes Australia, NewZealand, Melanesia, Micronesia, and Polynesia. Overseasterritories were included in the region of the parent country.China, when referenced separately, includes Hong Kong.International Monetary Fund classications were used tocategorize economies as advanced or developingand emerging.


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Visit our transportation and logistics industry websiteat www.pwc.com/us/industrialproducts 2011 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers and PwC reer to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the contextrequires, the PricewaterhouseCoopers global network or other member frms o the network, each o which is a separate and independent legal entity. This document is or general inormationpurposes only, and should not be used as a substitute or consultation with proessional advisors. MW-11-0306

PricewaterhouseCoopers has taken all reasonable steps to ensure that inormation contained herein has been obtained rom reliable sources and that this publication is accurate and authoritativein all respects However it is not intended to give legal tax accounting or other proessional advice I such advice or other expert assistance is required the services o a competent proessional

Documents

1Q11 TL MA Report