In the third quarter of 2010, the number of merger and acquisition (M&A) deals announced in the global transportation and logistics (T&L) sector remained above the pace of 2009 and approximates the pace of the year-to-date period, with 31 deals in Q3 compared to 32 deals last quarter and 26 deals in Q3 2009, according to a new PwC US report,  The pace of deal value in Q3, which was $12.8 billion, dropped slightly from the first two quarters of the year in which total deal value was $14.1 billion in Q2 and $16.1 billion in Q1 2010. Q3 deal value is significantly lower than 2009 due primarily to a Q4 2009 $36.7 billion acquisition, which boosted last year’s figures. “Despite several positive signs of the health of the M&A T&L deal market, including total deal value, average deal value and volume all being up compared with 2009—when excluding the $36 billion transaction in Q4 2009—these metrics have remained relatively unchanged over the course of 2010,” said Kenneth Evans, U.S. transportation and logistics leader for PwC.  “Due to the consistently flat rate of activity, our predominant conclusion is that recovery in T&L deal activity has paused this quarter. Two megadeals, or deals with a disclosed value of at least $1 billion, were announced during the third quarter of 2010, which matches the pace of each of the first two quarters of the year. Both megadeals were passenger air announcements. This consistent pace in each quarter of this year also indicates that recovery has paused. Trends in minority stake purchases and acquisition techniques offered more positive signals in the third quarter. Minority stake purchases declined, indicating that acquirers want, and are better able, to take controlling interests in targets. This trend also relates to the significant rise in divestitures as these transactions involve the transfer of majority interests. Another positive indicator is that deals for targets going through bankruptcy or a restructuring declined in the third quarter. These results match the expectation that the deal environment will increasingly shift away from need-based transactions and more toward transactions that are expected to support growth. The regional distribution of T&L sector M&A activity shows that China has become a more significant acquirer in the market, accounting for a much greater proportion of overall deal volume in Q3 compared to 2009. All but one of these deals were local-market transactions, a trend likely to persist due to Chinese acquirers’ focus on consolidating relatively fragmented domestic markets. The trend in local-market acquisitions also led Asia and Oceania acquirers and targets to account for almost half of the deals announced in Q3, though the value of deals by region was much more balanced among geographies this quarter. Despite the rise of China as a T&L deal maker, the proportion of activity involving advanced economy acquirers remains even with 2009. Though acquirers from several key advanced economies have become less active, the return of U.S. parties to the deal market has supported overall deal totals by advanced economy entities. The U.S. and Europe regions showed their significance in T&L deal-making during the third quarter, as they represented approximately half of the deal value and one-quarter of the volume. “While risks of a double-dip recession in Europe and the U.S. could potentially lead to an overall reduction in activity given the importance of these regions as drivers of M&A, it’s possible that  deal totals will resume their moderate recovery with acquirers gradually entering into larger transactions,” said Klaus-Dieter Ruske, global transportation and logistics leader for PwC. “Many transportation and logistics businesses still have the motivation to improve efficiency and growth prospects, and were generally able to improve their balance sheets and liquidity during the recent downturn. We believe that these factors will encourage more