Mining and metals deals slump amid global uncertainty
THE faltering global economy has taken its toll on corporate deal-makers, with floats, mergers and acquisitions drying up across the mining and metals sector.
THE faltering global economy has taken its toll on corporate deal-makers, with floats, mergers and acquisitions drying up across the mining and metals sector.The number of transactions launched globally in the March quarter slumped 34 per cent below that for the first quarter of 2011. Deal value was down 20 per cent.According to statistics compiled by Ernst & Young, almost 300 transactions took place during the March quarters of 2010 and 2011, but that number slumped to just 195 this year.Total value fell from $US31 billion in the first quarter of 2011 to $US25 billion this year, despite that sum being bolstered by 10 deals each worth more than $1 billion.Canada led the world in terms of value for mining and metals transactions.Ernst & Young spokesman Lee Downham said despite the numbers, there was cause for some optimism, particularly with the massive proposal to merge Glencore and Xstrata still in the pipeline for 2012. Small miners continue to struggle to find finance, with just 17 mining and metals stocks floating in the first three months of 2012.That number was well below the 28 in the December quarter and the 31 in the March quarter of 2011.Applications for five mining floats have been withdrawn recently.Yulleba Resources pulled its float despite seeking just $3 million and working in commodities gold and iron ore that are near record high prices.Some energy floats have fared better in Australia, with oil player Pura Vida raising $4 million in February before doubling its offer price to more than 40? inside its first month.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free