Forging ahead: US M&A H1 2017

Drive for connectivity fuels manufacturing and industrials M&A

Convergence between sectors generates deals, while dealmakers adopt a wait-and-see approach in response to Trump's policies

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The US manufacturing sector saw US$8 billion spent across 76 deals in H1, representing a 21.2 percent uptick in value compared to the first half of 2016. Activity targeting the industrials sector, on the other hand, saw deal value slump 62 percent compared to H1 2016, with 235 deals worth US$20 billion.

The largest manufacturing and industrials (M&I) deal in H1 saw Caisse de Depot and Suez acquire GE Water & Process Technologies for US$3.4 billion. Private equity firms have been active players too, buying non-core assets off M&I companies or backing groups in exciting niches, as in H.I.G. Capital's US$230 million acquisition of cinema seats maker VIP Cinema Seating.


Convergence drives deals

But dealmaking between manufacturing and technology companies has been the primary driver of M&A within the sector, as traditional M&I companies move to take advantage of new technological applications for their products.

Intel Corporation's US$15 billion acquisition of Israeli advanced driver assistance system developer Mobileye, for example, places the technology group firmly in the automotive manufacturing market. The deal demonstrates how established M&I and technology companies are seizing opportunities to expand into new markets and sectors.

"Convergence has been especially pronounced during the last couple years, and we think it's going to continue to increase and drive M&A," says White & Case partner Michael Deyong. "Manufacturers and technology companies are looking at how they can connect as many devices as possible in as many places as possible. That is not going to change anytime soon."


Dealmakers weigh Trump's plans

As is the case in other sectors, however, uncertainty around the policy direction of the current American presidential administration has given some dealmakers pause. In some respects, President Trump's intention to bring more manufacturing back into the US could provide a boost for the industry, but fears that a more protectionist stance could hinder export opportunities counter-balance the potential upside.

"Shielding manufacturing should have positive effects for mid-sized manufacturers," Deyong predicts, "but most large groups operate globally, and they could suffer if protectionist measures are introduced."


Top manufacturing & industrials deals H1 2017

1. Caisse de Dépôt et Placement du Quebec; Suez agreed to buy GE Water & Process Technologies for US$3.4 billion

2. Bain Capital agreed to buy New Diversey for US$3.2 billion

3. WestRock Company bought Multi Packaging Solutions, Inc. for US$2.2 billion


Forging ahead: US M&A H1 2017


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