The global metals industry returned to a lower pace of M&A activity in the first quarter of 2017. This quarter brought in 20 deals for a total value of $7 billion, on par with the suppressed volumes and values seen throughout the past three years. Despite a positive global economic outlook and a newfound movement toward nationalization, the metals industry continues to struggle with low profitability due to the capital intensity of mining, transportation, smelting, and forging.
There are three persistent trends for M&A in the metals industry: (1) dominance from the Asia & Oceania region, (2) a gearing towards targets in emerging and developing countries, and (3) an inclination for local transactions. While the first two trends remain intact, this quarter stands out in that cross-border transactions account for the majority of activity.
Tronox’s $2.2 billion acquisition of National Titanium Dioxide marks the largest transaction this quarter. The transaction shows that specialty metals, such as those used for coatings and plastics continue to drive the highest value in the industry.
"Following a slight uptick in Q4 16, the Metals deals market declined in the first quarter of 2017. Overall, the value and number of deals declined compared to the prior quarter. The majority of Metals deal activity in Q1 17 was attributable to strategic investors who made up 66% of deal volume and 75% of deal value."
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