Forging ahead: Global metals mergers and acquisitions analysis - 2Q 2010

Making better deals in a changing environment: Merger integration

This quarter, Forging ahead continues its special report series on making smarter deals in a changing environment and examines merger integration and the ever increasing importance of capturing synergies to maximize deal value. The discussion explores the importance of cost containment, identifying synergy targets, and identifies strategies for successful M&A integration.

In the second quarter of 2010, merger and acquisition deal activity in the global metals industry shows further improvement from the uptick seen in the first quarter of 2010. A notable trend during the second quarter was the migration of M&A activity away from the small and middle segments of the market toward larger transactions. This movement was exemplified by the number of announced “mega deals,” categorized as deals with a disclosed value of at least $1 billion, which equals the total number of announcements for all of 2009 and more than doubles the mega deals announced in Q1 2010.

This trend represents reason for optimism, as potential acquirers continue to focus less on internal cost and liquidity initiatives associated with the recent downturn and instead, shows signs of improved confidence and engagement in larger strategic acquisitions. We believe that this activity is a positive indication for future deal flow, contributing to our relatively optimistic outlook for metals M&A activity over the second half of 2010.