Global metals M&A deals insights:

Q3 2016 update

Executive summary

While global M&A activity in the Metals industry continues to fall, the average deal size appears to be increasing. Although the industry has not seen any major transformations this year, an increase in average deal size indicates a trend away from the mainstream and into more diversified metal manufacturing.

Of the $11.1 billion in transaction value in Q3 2016, 51% was directed towards Steel and 47% towards the Other Metals category. The Iron Ore category also continued to contribute to deal activity, albeit at a lower value per transaction.

The majority of M&A transactions in the Metals industry continued to occur within country borders due to the high cost of transportation of heavy metal products. Over the past three years, 75% of deal activity has occurred locally.

The Asia & Oceania market continues to show a steady pace of consolidation, accounting for 68% of the overall deal volume this quarter. The largest deal in Q3 2016 was between two steel manufacturers in China.

Whereas M&A activity three years ago was led by industry participants, a balancing of strategic and financial participation appears to reflect growing external interest in the Metals sector. This quarter, financial investors accounted for almost half of the activity in the sector.

metals deal value and volume

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Global metals M&A deals insights: Q3 2016 update

metals deal value and volume data

metals deal disclosed value

Key trends/highlights

  • Despite a 17% drop in deal volume, the Metals sector saw a 143% increase in deal value this quarter. This signifies that average deal value increased significantly due to a few larger key transactions.
  • Deal value growth was driven by the Steel and Other Metals categories. The Steel category contributed to 51% of deal value and 47% of deal volume this quarter.
  • There were two megadeals announced during the reported quarter. The largest deal was Baoshan Iron & Steel’s acquisition of Wuhan Iron & Steel Co. Ltd. for $4.2 billion.
  • Financial investors’ share of M&A activity increased to 47% by volume this quarter, showing a balancing of strategic and financial interest in the industry.
  • The majority of M&A activity in the Metals sector in the quarter took place within country borders.
  • The Asia & Oceania region continues to lead deal value and volume in the sector, contributing to 68% share of overall deal volume this quarter.

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: Q3 2016 update.

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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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