PricewaterhouseCoopers Report Reflects Continued M&A in Metals Industry
04/17/2008 - Report recently released by PricewaterhouseCoopers shows that global metals industry deals in North America soared to record levels in 2007, with 115 deals totaling $77 billion in value, accounting for 53% of total deal value in the global metals industry for 2007.
The credit crisis in the U.S. has not hindered metals-industry growth, according to a report recently released by PricewaterhouseCoopers.
The report, Forging Ahead: Mergers and Acquisitions Activity in the Global Metals Industry, shows that global metals industry deals in North America soared to record levels in 2007, with 115 deals totaling $77 billion in value. This accounts for 53% of total deal value in the global metals industry for 2007 and nearly matches the entire global metals industry deal value for 2006 ($86 billion).
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Forging Ahead:
Mergers and Acquisitions Activity in the Global Metals Industry This report references several specific deals and companies that were active in transactions within the global metals industry over the past two years.
The report also includes the perspectives of 26 CEOs from the metals industry on their optimism in the industry, as reported by the PWC 11th Annual Global CEO Survey.
For more information, visit www.pwc.com/metals.
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"Industry consolidation and the declining value of the dollar will continue to make the U.S. an attractive region for steelmakers from emerging and industrialized markets alike," said Douglas Dean, U.S. Metals Leader, PricewaterhouseCoopers. "It does not appear that steel consumption will not taper off any time soon, and, in North America specifically, consumption is likely to outpace production over the next couple of years."
Several steelmakers based in emerging economies acquired North American producers during 2007, as a way to both move up the value chain and obtain greater access to the U.S. market. Some North
American producers bought smaller competitors as a means to reduce overcapacity and expand their product offerings.
North America's aluminum market was particularly valuable in 2007, with 18 deals totaling $46.7 billion. In contrast, the steel sector accounted for a great number of deals (71) but accumulated less total deal value than the aluminum sector, at $30 billion. In addition, 26 deals closed in the base metals industry, accounting for $300 million in North American deals last year.
Despite the unprecedented level of deal-making in the global metals industry in 2007, the sector was not completely unaffected by the credit crisis. Historically, financial buyers account for a significant portion of the total deal value of transactions (20% in 2006); however, in 2007, they only accounted for 4%. According to the report, the fallout from the credit crunch has been particularly evident in the steel sector, where financial buyers only accounted for $3.9 billion of deal value in 2007 compared to $14.2 billion in 2006.
"With increased uncertainty in the financial environment, financial buyers are acting more cautiously than ever before proposing deals in the metals industry," said Jim Forbes, Global Metals Leader for PricewaterhouseCoopers. "With continued strong metal prices and demand, corporate buyers will help drive and support the booming global M&A metals market over the next few years."
PricewaterhouseCoopers provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across the company’s network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
PricewaterhouseCoopers global metals practice comprises a global network of industry professionals serving metals clients strategically located in over 30 countries around the world. PricewaterhouseCoopers services global clients involved in ferrous and non-ferrous primary and secondary metals production around the world by bringing experience, international industry best practices and a wide range of specialized resources.
Forging Ahead: Mergers and Acquisitions Activity in the Global Metals Industry provides an analysis of domestic and cross-border deal activity in the global metals industry (with the exception of mining transactions unrelated to the production of steel and aluminum). It is based on data from Thomson Financial (supplemented by company reports, where necessary), and covers all mergers and acquisitions completed in 2006 and 2007.
