Price slowdowns fuel mining takeovers
Source: Bloomberg News |
July 26, 2011, Tuesday
|
Print Edition
Print Edition
MINING mergers and acquisitions doubled in value in the first half, according to consultant Ernst & Young, which has forecast an extension of the trend through the year.
Deals by mining companies increased to US$96.3 billion from US$47.9 billion a year earlier, though the number completed fell to 511 from 573, E&Y said.
Lee Downham, global mining transaction chief at E&Y, said: "I see this momentum continuing, and at the end of the year we will see a higher value and higher volume of deals from (compared with) 2010."
Motivation for the trend comes from plateaus in previously climbing project and commodity prices. Demand for coal and copper producers will fuel acquisitions in the second half, with deals focusing mainly on companies operating in Africa and South America, Downham said.
Volumes fell in the first half as companies were avoiding "opportunistic and uncertain transactions," he said.
He added: "We saw strategic deals and deals where companies know they have only one chance of getting those assets."
The number of initial public offerings by mining companies rose 30 percent to 73 in the first half, raising US$13 billion, more than double a year earlier, according to E&Y.
ArcelorMittal, the world's largest steel producer, and Peabody Energy, the biggest US coal miner, plan to offer A$4.7 billion (US$5.1 billion) for Brisbane-based Macarthur Coal, the Australian company has announced.
In May, Glencore International, a commodities trader, completed a US$10 billion initial public offering, selling stock in London and Hong Kong in the world's biggest IPO this year.
Deals by mining companies increased to US$96.3 billion from US$47.9 billion a year earlier, though the number completed fell to 511 from 573, E&Y said.
Lee Downham, global mining transaction chief at E&Y, said: "I see this momentum continuing, and at the end of the year we will see a higher value and higher volume of deals from (compared with) 2010."
Motivation for the trend comes from plateaus in previously climbing project and commodity prices. Demand for coal and copper producers will fuel acquisitions in the second half, with deals focusing mainly on companies operating in Africa and South America, Downham said.
Volumes fell in the first half as companies were avoiding "opportunistic and uncertain transactions," he said.
He added: "We saw strategic deals and deals where companies know they have only one chance of getting those assets."
The number of initial public offerings by mining companies rose 30 percent to 73 in the first half, raising US$13 billion, more than double a year earlier, according to E&Y.
ArcelorMittal, the world's largest steel producer, and Peabody Energy, the biggest US coal miner, plan to offer A$4.7 billion (US$5.1 billion) for Brisbane-based Macarthur Coal, the Australian company has announced.
In May, Glencore International, a commodities trader, completed a US$10 billion initial public offering, selling stock in London and Hong Kong in the world's biggest IPO this year.
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