M&A Information from the Industrials Industry

M&A Information from the Industrials Industry

By John Hammett

September 08, 2016

industrials industryOne of the most significant deals in the industrials industry announced this year was the announcement of Johnson Controls (JCI) merging with Tyco International (TYC), an Ireland-based fire and security provider. The two companies announced their merger agreement on Jan. 25 for approximately $14.35 billion in cash and stock. The transaction is expected to close in early September.

On the whole, US manufacturers do not anticipate major business disruptions to result from the UK’s decision to exit the European Union, according to polling conducted by the Institute for Supply Management (ISM) in July 2016. Among manufacturing industry purchasing executives polled, 58% said Brexit would have a negligible financial impact on their organizations. However, 38% reported they believed Britain’s exit would have a negative or slightly negative impact. Among those who expect a negative impact, more than half said it would stem from a change in the exchange value of the US dollar; 14% expected disruptions in global demand. Nearly 85% of those polled said Brexit would have a negligible impact on capital spending, and fewer than 15% expected it to negatively affect their workforces. The ISM also reported that US manufacturing activity grew in June 2016 for the fourth consecutive month, and that 13 of 18 reporting industries reported expansions in activity. After a prolonged period of weak growth, US manufacturing may be improving amid a weaker dollar and strengthening energy markets, according to The Wall Street Journal.

Industry Indicators

  • Total US manufacturers’ shipments, which indicate manufacturing sector activity, fell 2.7% year-to-date in May 2016 compared to the same period in 2015.The spot price of crude oil, which indicates energy prices paid by manufacturers, fell 29.1% in the week ending April 8, 2016, compared to the same week in 2015.
  • The spot price of crude oil, which indicates energy prices paid by manufacturers, fell 10.8% in the week ending July 8, 2016, compared to the same week in 2015.

Posted by John Hammett.

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