As rumors fly that a billion dollar merger between Sinclair Knight Merz and Jacobs Engineering is all but inevitable, a new report indicates M&A activity by US buyers surged in the second quarter as engineering firms endeavour to expand their geographic reach.
PWC’s Engineering Growth report for August indicates that the volume of M&A deals in the global engineering sector valued at $50 million or more during the second quarter jumped by over 50 per cent, as companies sought to expand their international presence and product sets via the handy acquisition of other firms.
The report further notes that US-based engineering firms played a highly prominent role in second quarter M&A activity and were involved in over a third of deals during the period, for a threefold increase compared to just 11 per cent in the first quarter.
Of the 14 US deals which were announced in the second quarter six were cross-border affairs, indicating the increased willingness of US engineering firms to expand their market share and geographic reach via overseas acquisitions.
Cross-border deals saw a significant increase in general, leaping from seven in the first quarter to 16 in the second quarter.
The PWC report further points out that cross-border transactions have steadily increased as a percentage of engineering and construction deals since last year, and given the difficulty of international M&A transactions is undoubtedly significant of increased optimism amongst buyers.
This trend is set to continue in future amongst US engineering firms, who will discern greater opportunities for growth and expansion in the sector as their own economy gradually recovers.
The slated acquisition of privately held Australian consultancy Sinclair Knight Merz by New York-listed Jacobs Engineering for a consideration of at least AUD$1 billion could signal the start of a wave of take-overs by American companies, bolstered by the improving health of the US economy.
If successful Jacobs Engineering’s takeover of SKM will be its second acquisition for the year, following its purchase of Compass Technology Services, an Atlanta-based wireless telecommunications firm., in June.