Global metals deals insights: Q3 2019

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Executive summary

Q3 2019 was marked by quarter-over-quarter decreases in deal value, volume, and average deal size from Q2 2019. Notably, deal value was nearly halved from Q2 2019 levels. The Metals sector also experienced similar declines in all three metrics compared to YTD 2018, due in part to a decline in megadeals from four in YTD 2018 to one in YTD 2019. While the Steel sub-sector continues to lead the overall Metals sector in terms of YTD deal volume, it has also experienced the most severe decline in deal value relative to YTD 2018 levels.

metals-deal-summary

“The theme of uncertainty, which adversely impacted much of the year, has seemingly carried into the third quarter of 2019. Concerns over a looming recession have the potential to exacerbate these unresolved issues and negatively influence deal activity through the remainder of 2019.”

Brian Kelly, US Metals Deals Leader

Trends and highlights

  • In Q3 2019, the total deal value declined by 46% to $3.2 billion versus Q2 2019. For YTD 2019, the deal value also declined by 48% to $25.6 billion versus YTD 2018.
  • Deal volume for Q3 2019 declined by 9% to 147 deals compared to Q2 2019. Deal volume for YTD 2019 also declined by 15% to 446 deals compared to YTD 2018.
  • The average deal size for Q3 2019 declined significantly by 45% to $40.8 million versus Q2 2019. The average deal size also declined by 40% to $109.9 million for YTD 2019 versus YTD 2018.
Metals-deals-trends-highlights

Highlights of deal activity

metals-deals-activity-overview
metals-deals-activity-chart

Key announced transactions (YTD 2019)

Announced

Target name

Target nation

Acquirer name

Acquirer nation

Status

Deal value*

Category

01/14/19

Goldcorp Inc.

Canada

Newmont Mining Corp.

United States

Completed

9,966

Other Metals

03/13/19

Tianshan Aluminum Co. Ltd. of The 8th Division of Xinjiang Production and Construction Corps

China

Shimge Pump Industry Group Co. Ltd.

China

Pending

2,530

Aluminum

03/22/19

IPSCO Tubulars Inc.

United States

Tenaris SA

Luxembourg

Pending

1,209

Steel

04/10/19

Global Brass and Copper Holdings Inc.

United States

Wieland-Werke AG

Germany

Completed

989

Other Metals

07/23/19

Maanshan Iron and Steel Co. Ltd.

China

Baosteel Hong Kong Investment Co. Ltd.

Hong Kong

Intended

659

Iron Ore

04/15/19

Nyrstar NV

Belgium

Trafigura Group Pte Ltd.

Singapore

Completed

642

Other Metals

04/25/19

Ivanhoe Mines Ltd.

Canada

CITIC Metal Africa Investments Ltd.

Hong Kong

Completed

454

Steel

09/28/19

Ningxia Hongdunzi Coal Co. Ltd.

China

Beijing Haohua Energy Resource Co. Ltd.

China

Pending

443

Other Metals

06/11/19

Jiangsu Yulong Steel Pipe Co. Ltd.

China

Investor Group

China

Pending

397

Steel

02/27/19

Panyu Chu Kong Steel Pipe Co. Ltd.

China

Guangzhou Xingchen Consulting Co. Ltd.

China

Pending

365

Steel

Source: Thomson Reuters and other publicly available sources. *In Million USD


Metals deals outlook

The uncertainties surrounding ongoing trade negotiations, retaliatory rounds of tariffs, and the health of the global economy have seemingly continued to hinder deal activity through Q3 2019. Overall, deal volume and deal value in the Metals sector declined both on the quarter-over-quarter and year-over-year basis, with deal value experiencing a severe decline.

Despite accounting for the highest YTD deal volume amongst Metals subsectors, the Steel industry faced continued challenges in Q3 2019 and is set to face potential new adversity in the coming quarters. Of note, the global automotive industry has seen a softening in demand and, domestically, contract negotiations between General Motors and the UAW remain ongoing. Both developments have potential to adversely impact upstream suppliers of steel and other metal components in the near term.

In addition to the geopolitical and trade issues that were the continued theme of the first half of 2019, Q3 saw heightened concerns over a looming recession. Reports of slowdown in the manufacturing sector and inverted yield curves have only added to the fears of a greater economic contraction. Private equity and corporate investors in the Metals industry and beyond will have to contend with these uncertainties which show little sign of being resolved in the near term. 

About the data

The information presented in this report is an analysis of deals in the global metals industry. Deal information was sourced from Thomson Reuters and includes deals for which targets have an SIC code that falls into one of 30 metals industry groups. Certain adjustments have been made to the information to exclude transactions which are not specific to metals or incorporate relevant transactions that were omitted from the SIC industry codes.

This analysis includes all individual mergers, acquisitions, and divestitures for disclosed or undisclosed values, leveraged buyouts, privatizations, minority stake purchases, and acquisitions of remaining interest announced between October 1, 2016 and September 30, 2019, with a deal status of completed, partially completed, pending, pending regulatory and pending completion, and excludes all rumors and seeking buyers. Additionally, transactions that are spin-offs through distribution to existing shareholders are included.

Percentages and values are rounded to the nearest whole number which may result in minor differences when summing totals.

Contact us

Brian Kelly

Metals Deals Leader, PwC US

Michael Tomera

US TAS Market Leader, Midwest Market, PwC US

Jock O´Callaghan

Global Metals Leader, PwC US

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