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December, 4th 2021

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JUL 26

Metals M&A declines, North American market improving: PwC


Global metals mergers and acquisitions increased in volume on-quarter in the second quarter but their value declined, as political uncertainties, trade negotiations and tariffs impacted activity. So says PricewaterhouseCoopers in its latest Global Metals Deals Insight report monitored by Kallanish.

Deal value in Q2 was $5.3 billion, a decrease of -68% on-year, while volume increased 1% to 143 deals. The average deal size decreased by -65% to $75.2 million, as there was a lack of large and megadeals during the quarter. The largest deal occurred in the copper sector.

Steel represented the second-largest deal volume and value in the metals sector after other metals in Q2. Steel deal value dropped -2% to $2.4 billion but volume grew 4% to 59 deals.

“Despite having to navigate weak demand and falling prices largely driven by trade conflicts over the last several months, the steel sector has experienced demand increases and stabilising prices in long steel products during the second quarter,” PwC says. “The driver of long steel demand is mainly attributable to increases in non-residential construction. Overall, higher steel prices still did not materialise, however, due to low demand for rolled steel products driven by the automobile industry.”

The reaching in May of a trade agreement by the US with Canada and Mexico to lift metals tariffs is promising. “Despite the continued lull in M&A activity, recent North American trade negotiations and increased steel demand may be an indication of a more favourable deal climate in the coming quarters,” PwC continues. “However, corporate and private equity investors will undoubtedly continue to face uncertainties around the global markets and geopolitical factors including Brexit and international trade relations.”

Steel sector deals in Q2 included CITIC Metal Africa Investment’s acquisition of Canada’s Ivanhoe Mines, an investor group’s takeover of China’s Jiangsu Yulong Steel Pipe, and an investor group’s acquisition of South Korea’s Dongbu Steel. Also, the National Bank Of Egypt acquired Egypt’s Arab Co. For Special Steel.

In the first half of 2019 metals M&A deal value fell 34% on-year and volume dropped -21%.

Adam Smith Germany