Continued Industry Consolidation

M&A activity over the past few years has been strong as the metals industry consolidated to improve its financial strength, increase negotiating power with customers and suppliers, and boost capacity utilisation. Companies focused on rationalising operations and building core activities and assets through acquisitions, divestitures, carve-outs, privatisations and other transactions. As the industry consolidates new opportunities are arising for multinational firms to expand into global markets, both into and (just as importantly) out of Brazil, Russia, India and China (BRIC), CEE and the Middle East region, and despite the current economic climate there has been significant deal activity in Russia and Latin America, while cross-border acquisitions of US targets increased because of weakness in the US dollar.

It is uncertain how the decline in prices and weakening global demand, along with the recent strengthening of the US dollar, will affect mergers going forward. Many companies have already announced output reductions or capacity curtailments, which may mitigate some of the recent downward pressure on price. However, as the credit crisis continues, we expect strategic investors will drive most deal activity, even though the sector constituents that have recently engaged in large deals may choose to focus on merger integration, cost containment, and capacity rationalization in the near term.

How PwC can help you

At PwC we provide a full range of transaction services to help companies through this continued industry consolidation, assisting on acquisitions, divestitures, carve-outs and many other transactions. Whatever your requirement – be it Financial Due Diligence, Private Equity, Corporate Finance, Technical Accounting, Reporting and Auditing, M&A pre and post–transaction services, international tax planning or risk management – we have a team in place to assist you. We also provide cost effective solutions to help emerging players from the BRIC countries understand new metals markets, barriers and risk of entry, and challenges of doing business in new markets.