Central Pennsylvania regional M&A update: Q2-2016

M&A activity

M&A activity in the region rebounded during the second quarter of 2016 (Q2-2016) rising nearly fifty-seven percent to thirty-six closed transactions as compared to the first quarter’s twenty-three. The second quarter also compared favorably to the thirty closed transactions reported same period in 2015. The strong quarter, however, was not enough to make up the ground lost in 2016’s first quarter (Q1-2016) as year-to-date deal totals in the region remain approximately twenty-one percent below the same period in the prior year.

The aggregate value of M&A transactions with reported values was $9.3 billion during Q2-2016, more than 63.5 percent of which was attributable to the $5.9 billion acquisition of Pinnacle Entertainment, Inc. by Gaming and Leisure Properties, Inc. (Nasdaq-GS: GLPI), which closed on April 28, 2016. This is a twenty-seven percent increase from the total deal value of $7.4 billion in Q1-2016 and an increase from $3.1 billion in Q2-2015.

Central Pennsylvania regional market M&A activity
Aggregate transaction size and number of deals

Source: S&P Capital IQ and Baker Tilly Capital research, June 2016

M&A activity by industry Q1-2016

The Industrials sector led the region in M&A activity accounting for 36.1 percent of the total deals that closed in Q2-2016. The Consumer sector made up the second largest share of total transactions closed during the period with 33.3 percent; while the Healthcare, Information Technology, Financials, and Advertising sectors constituted the remaining share of Q2-2016 transactions, representing 13.9 percent, 8.3 percent, 5.6 percent, and 2.8 percent, respectively.

 

Central Pennsylvania regional middle-market M&A activity

The aggregate value of closed middle-market transactions with reported values was $228.5 million during Q2-2016. This marks a $163.2 increase from the aggregate deal value of $65.3 million during Q1-2016 and an increase of $204.5 million, from the $24.0 million during the second quarter of 2015.

 

Source: S&P Capital IQ and Baker Tilly Capital research, June 2016
Middle-market is defined as transaction values between $10 million and $200 million.

The average transaction size $104.1 million for the three deals with reported values in Q1-2016, which was a $76.5 million increase from the average transaction size of the eight deals with reported values in Q4-2015.

Central Pennsylvania regional middle-market average transaction size

The $228.5 million in aggregate reported transaction value was comprised of three transactions: Gatehouse Media’s acquisition of Journal Multimedia ($18 million), Encore Rehabilitation Services acquisition of Metro Therapy, Inc. and Select Medical Rehabilitation Services ($72.5 million) and Gaming and Leisure Properties, Inc.’s sale of The Meadows Race Track and Casino to Pinnacle Entertainment ($138 million), resulting in an average reported transaction value of $76.2 million for the period. This marks an increase of approximately $43.5 million versus the average in the Q1-2016.

 

Source: S&P Capital IQ and Baker Tilly Capital research, June 2016
Middle-market is defined as transaction values between $10 million and $200 million.

Buyers and targets by location

As presented below, the largest number of buyers was located in the Harrisburg area during the Q2-2016, while the largest number of entities acquired being located in the Harrisburg and Lehigh Valley areas.

Buyer by location

 

Buyer by location

 

First three numbers of zip codes included in each region, as categorized by S&P Capital IQ: Altoona—166,168; Harrisburg – 170, 171, 172, 178; Lancaster – 173,174,175,176; Reading – 179; Lehigh Valley – 180,181,183; Williamsport – 197,177.

Notable Q2-2016 closed middle-market deals >

Source: S&P Capital IQ

View the full Central Pennsylvania regional M&A update >


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