In their fourth-annual report, "Forging Ahead," PricewaterhouseCoopers took a deep dive into the metals sector, analyzing the M&A numbers, the economic impact on dealmaking and forecasting trends in the industry. PwC found that there have been major shifts of focus: from steel to aluminum and away from Western Europe to the new M&A hot spot of North America.
They noted the aluminum sector traditionally experienced much less M&A activity than the steel sector, but mining giant Rio Tinto plc set a new sector record with the $38.1 billion acquisition of Alcan. This, together with Rusal's $30 billion three-way merger with Sual and Glencore International, helped push the total of aluminum deals to $77.3 billion, more than 19 times the amount traded in 2006. And at $147.4 billion, BHP Billiton Ltd.'s latest offer for
Rio Tinto is already more than the combined value of
all the transactions that occurred in 2007.
A few of the topics covered:
- Consolidation high on the agenda,
- The era of the megamerger,
- Concern over the long-term outlook,
- Incremental expansion in steel sector, and
- The growing carbon emissions
regulatory burden.
The report says the fragmented steel sector still needs to be consolidated and that a duopoly in the iron ore seaborne market would put particular pressure on nonintegrated steelmakers. A survey found that metals CEOs believe that M&A will play a
much greater role than joint ventures and strategic
alliances. -
Baz Hiralal
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