PERTH (miningweekly.com) – The number of large merger and acquisition (M&A) deals in the metals sector was likely to decline this year, replaced by “bite-size” deals, advisory firm PricewaterhouseCoopers (PwC) reported this week.
In its yearly metals M&A review and forecast, PwC’s global metals leader Jim Forbes noted that there was no doubt that the metals industry was facing some of its toughest challenges yet, as companies battled the headwinds of ongoing economic uncertainty and unpredictable costs around raw materials and energy.
“On the surface, we are still seeing some mega-deals but they are fewer and, if we created a top ten of the deals announced and completed in 2012, just half would have been valued above $1-billion,” Forbes said.
"We also found, through our analysis, that the metals sector has experienced a 'double dip' downturn in M&A activity with deal numbers outside the Asia-Pacific region falling back down to the post-credit crunch low of 2009."
The report showed that Asia performed the best in the M&A sector, dominating the 2012 deals market. It accounted for 68% of total deal value, more than three times the 19% share it held in 2011.
PwC noted that, in 2012, there were 507 deals against the 531 transacted in 2011, still significantly above the highest pre-credit crunch volume of 411 in 2007.
Deal value for 2012 was also 203.5% higher than the $15.1-billion deal value total of 2009. Completed deal value in the sector was up 20% year-on-year, rising from $38.2-billion in 2011 to $45.8-billion in 2012.
However, the totals for 2012 masked a vast geographic imbalance, said Forbes, who noted that the Asia-Pacific region accounted for $31.1-billion of the $45.8-billion total, and $9.4-billion of that was derived from the completion of the Sumitomo-Nippon Steel merger, left pending from the previous year.
In North America, deals declined by 18% from 118, valued at $12.2-billion in 2011, to 97, valued at $4.3-billion in 2012. The region’s share of world deal value went from 32% in 2011, to 9% in 2012.
Asia-Pacific was the deals rider of 2012, dominating 50% of all world deals with 254 acquisitions valued at $31.1-billion against 206 in 2011. It also took 68% of total deal value in 2012, up from 19% in 2011.
In Western Europe, there were 91 deals, down from 103 in 2011 and world market value halved from 26% in 2011 to 13% last year. Central & Eastern Europe deal numbers fell by 32% and world market share was 1%.
In Central and South America, there were 16 deals in 2012 valued at $4-billion, a drop of 50% on 2011.