Long-term optimism continues to feed M&A activity (science news)
No commentsBy Yolanda Torrisi
Continued merger and acquisition (M&A) activity is being driven by optimism about long-term growth and profitability with sustained demand in Asia expected to exceed any fluctuations in Western demand.
A Pricewaterhouse Coopers (PwC) report titled Mining Deals 2007 says even though 2007 was a record year for deals, dramatic changes will continue in 2008 due to ongoing strength in the mining M&A market and consolidation among all sizes of company as well as increasing vertical integration in the industry with upstream moves by power and metal companies.
It says Chinese, Russian and Indian companies are playing an ever-increasing role and that the biggest companies are achieving super-consolidated global scale.
Owing to skills shortages, record exploration costs and permitting taking longer than ever companies are seeking development projects to achieve scale and diversify their portfolios in commodities and geography. They can do so due to their huge buying power as a result of high commodity prices and buoyant market capitalizations.
According to the report 2007 was a record year for deals with 1732 concluded in the mining sector globally worth $159 billion. The number of deals was 69% higher than in 2006 while the value was 18% higher. A new deal record was set when Rio Tinto acquired Alcan for $43 billion.
There was no evidence of any slowdown in activity as a result of the credit crunch and in the fourth quarter of 2007, 510 deals were announced, more than double the number in the same period in 2006.
In the oil and gas sector there were 893 deals in 2007 worth $292 billion with the number of deals down 2% and the value unchanged. In the power sector there were 768 deals, up 23%, with a value of $373 billion, up 25%.
The value of deals in the Asia Pacific increased by 216%, in Africa by 38% and in the Russian Federation by 16% while in North America the value decreased by 7%.
The base metal sector contributed 41% of the total global mining deals and was down 21% on the 2006 figures. The diversified metals sector contributed 28% and was up by 297% while the other metals sector, including coal and uranium, contributed 18% and was up 194%. Precious metals contributed 13% and was down 32% on 2006.
Although the value of deals in North America fell after the mega-mergers of 2006 it remains the primary focus for deal-making, accounting for 49% of the business. The Asia Pacific was the main motor for growth in 2007 where the value of M&A deals increased by $24 billion fuelled by intense competition for Australian resources.
Deals by Chinese and Russian companies have increased six-fold in two years to $33 billion, accounting for 21% of global deal activity. The second largest deal worldwide in 2007 was UC Rusals $13 billion investment of a 25% stake in Norilsk Nickel. Others included Norilsks $5.4 billion cash purchase of LionOre and Chinalcos $789 million purchase of the Canadian company Peru Copper.
The report says 2008 will see further records in the value of deals as super-consolidation takes place. The tone has been set by BHPs takeover offer of $150+ billion for Rio, rumours of a potential $90 billion bid by Vale for Xstrata, and by Chinalco and Alcoas acquisition of a $14 billion (12%) stake in Rio.
It concludes that consolidation still has a long way to run and says there is considerable scope for deal-making in sectors such as copper, lead and zinc, and gold in China.
It also says the struggle that exploration companies are experiencing to gain funding may open the door to friendly deals with big mining companies or end users wishing to secure inputs, while a spate of hostile offers may also follow recent stock market falls, which have made some targets cheaper.
Yolanda Torrisi - Managing Editor and Director of The ASIA Miner, the international online mining magazine and mining news service.
Membership Sites-Another Place to Place Your Articles
By Jason Swanson
Article directoriesare not the only place you can submit your article. There are places called private members sites. There are some sites that do not require you to belong, but most insist you be a member in order to submit.
Submitting to private members sites can help your articles become more valuable to you and your sales. The competition for attention to individual articles is not as fierce at a private members site as it is in popular article directories. This will make it more possible for your article to have greater views.
Individual membership sites will have seperate guidelines for posting articles. It is important to read the guidelines and follow to them exactly when submitting an article or you may find yourself banned from the site.
Some membership sites have a seperate area of their websites specifically for the articles. Others have forums in which they allow you to post directly to the boards. It is almost mandatory to belong to these forums if you wish to post. Always watch for a chance to get your article out there. Read the small print as often the information for submission is placed there. Some membership sites offer the chance to have your article syndicated. You will need to add a small piece of HTML code to the site page where you want the article. This will further increase your exposure!
Sure Fire Wealth at www.surefirewealth.com is a place where non-members can post articles, as long as they aren’t really sales letters. If you have an informative article, you can not only submit it here, but also make it available for syndication.
To learn more about how to write your internet business plan, visit http://www.onlinebusinessmarketingstrategies.com.
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