Despite lower deal volume, total deal value increased by 78% this quarter when compared to Q2 2018. The increase in deal value was headlined by a $6.1 billion merger in the gold mining space. Transactions were also impacted by the rise in demand of metals such as cobalt, lithium, and nickel, as government initiatives to promote electric vehicles intensifies globally.
The ongoing US steel and aluminum tariff issues have led foreign businesses to begin targeting inbound M&A in the US in order to set up direct operations. Meanwhile, China’s supply-side reform to manage overcapacity in steel production and the closure of lower-end induction furnaces, are acting as headwinds for deal activity to add upgraded capacity in the region.
Strategic buyers drove deal activity despite low expected returns. And, with an aim for portfolio reorganization, major players targeted industry consolidation leading to increased transactions within country borders.
Overall, M&A activity is likely to strengthen in 2019 as long as the larger global economies continue to experience relatively steady growth, particularly if global disputes begin to settle.
“Despite headwinds caused by global trade tension and increasing interest rates, cash-rich corporations with strategic rationales are likely to drive deal activity for the rest of 2018 and into 2019.”
US Metals Deals leader, PwC US
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TAS Market leader, PwC US
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