188 M and A deals worth USD 27 billion in metals space in 2010

The metal space is expected to see a sizeable number of global merger and acquisition (M&A) scene deals in 2011 as well, according to a report by global consulting giant PricewaterhouseCoopers.

As per the report, the total deal value in the metal sector rose to USD 27 billion in 2010 from USD 15.1 billion in the previous year.

However, while the recovery looks large in year-on-year terms, it is modest compared to the highs of USD 86.4 billion and USD 144.7 billion reached in the M&A boom years of 2006 and 2007.

What is more, there was no repeat of 2009's USD 1 billion contribution by Indian buyers to the total deal value -- instead, Indian purchases dwindled to just USD 93 million in 2010.

In terms of volume, the number of cross-border deals in the metals space picked up to 188 in 2010 from 129 in the previous year. This translates into a growth of 46 per cent.
The largest deal completed in 2010 was Posco's USD 2.8 billion acquisition of a controlling stake in trading and resource company Daewoo International, followed by Vale-BRG Resources (USD 2.5 billion) and Sumitomo-Mineracao (USD 1.93 billion) deals.

Some of the other major deals were Tangshan-Handan (USD 1.68 billion), Gerdau Steel-Gerdau Ameristeel (USD 1.6 billion) and JFE Steel Corporation of Japan's acquisition of a USD 1.02 billion minority stake in Indian steelmaker JSW Steel.

Interestingly, the total value of the top five deals announced in 2010 or early 2011, which are anticipated to be completed during the year, has crossed USD 17 billion. This indicates a 60 per cent rise in size vis-a-vis the top five deals in 2010, which were worth USD 10.6 billion.

The report said that pending deal flows indicate this upward trend in deal sizes will become even more evident in 2011.

The upturn in deal activity was felt in all regions. The biggest year-on year increases came in the developed markets of North America and Western Europe.

In the Asia-Pacific region, total deal value rose significantly in 2010, but the USD 11.5 billion total was a long way short of rivalling the USD 16.4 billion record high recorded in 2008.

The rise was attributable to a revival in USD 1 billion-plus deals. None took place in 2009, whereas there were three such deals in 2010. However, the deal numbers actually fell by 10 per cent year-on-year.