ASIAN miners have propped up the value of the metal industry’s mergers and acquisitions (M&A) market in the last year, as blockbuster deals were replaced by smaller tie-ups, according to research out today.
Metal firms worldwide spent 20 per cent more on M&A in 2012, completing 507 deals worth a total of $45.8bn (£30.7bn), PwC’s annual report on the industry shows.
But Asia Pacific was responsible for 68 per cent of this spending, soaring from 19 per cent share of the M&A market the previous year.
The biggest deal to complete was Japanese firm Nippon Steel’s $9.4bn purchase of Sumitomo Metal.
Outside of this region, the sector’s dealmakers were reluctant to splash out, with the value of North American deals falling two thirds to $4.3bn and European M&A levels also falling back to the post-credit crunch lows of 2009.
The volume and value of deals in 2012 fell below PwC’s forecasts, which were knocked off course by volatile swings in commodity prices.
And the deals that were done were of a much smaller size than the mega-mergers of previous years, as cautious chief executives chose to focus on inward investment and improving operations rather than the acquisition trail, PwC said.
“On the surface, we are still seeing some mega-deals but they are fewer and if we created a top 10 of the deals announced and completed in 2012 just half would have been valued above $1bn,” said PwC global metals leader Jim Forbes.
“There is no doubt that the industry is facing some of its toughest challenges yet as companies battle the headwinds of ongoing economic uncertainty and unpredictable costs around raw materials and energy.”
Nevertheless, PwC is forecasting a 40.2 per cent rise in total deal value this year. The firm highlights continued appetite among Chinese and Indian metals firms for coal assets.