Global metals deals insights: Q1 2017


Executive summary

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."

Brian Kelly, US Metals Deals Leader

Key trends/highlights

  • Deal value fell to $7 billion this quarter, 20% lower than Q1 16 and a 62% lower than Q4 16. Total transaction value has averaged $12 billion per quarter over the past three years.
  • Deal activity in the metals industry continues to struggle due to low profitability of metals and mining operations.
  • While deal volume fell by 35% this quarter, it remains near the quarterly average of 24 deals.
  • Average deal size also fell in Q1 17, coming in at $350 million, 30% lower than the avg. deal size of $500 million.
  • The Asia and Oceania region continues to lead M&A activity in the metals industry, accounting for 75% of acquirers and 70% of targets over the past three years.
  • Tronox’s $2.2 billion acquisition of National Titanium Dioxide was the largest transaction this quarter, showing continued strength in the “other metals” category.
  • After a year without activity, South America brought in two transactions in the Steel category this quarter. Both transactions were driven by low profitability in the region.

For our full report and additional information on the top 10 deals announced for the year, our regional and subsector analyses, and the outlook for this sector, please remember to download our:

Global metals M&A deals insights: Q1 2017 update.

Contact us

Brian Kelly
US Metals Deals Leader
Tel: +1 (216) 875 3121

Michael Tomera
US Metals Leader
Tel: +1 (412) 355 6095

Jock O´Callaghan
Global Metals Leader
Tel: +61 (3) 8603 6137

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