This year has seen something of a comeback for big mergers and acquisitions (M&A) with The Economist counting 15 transactions worth over US$ 15 billion so far and a number still in the pipeline. Pfizer’s whopping US$ 98.7 billion offer for its UK rival, AstraZenica, currently tops the charts, while in the energy space, GE’s bid for the power business of Alstom, a French engineering firm, is valued at US$ 17.1 billion.
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This proposed deal has been causing quite a stir in Paris, where politicians are not always friendly to US takeover attempts of big French companies – as PepsiCo discovered when it tried to buy Groupe Danone, a French food company known for its dairy products. Indeed, the outspoken French industry minister, Arnaud Montebourg, accused Alstom’s chairman and CEO of a “breach of national ethics” for attempting to negotiate a deal with GE.
Montebourg has since clearly expressed a preference for a potential rival bid by Siemens, which would see it swap part of its train business and some cash for Alstom’s power business – although President Hollande has so far stayed neutral. Meanwhile, there are continued rumours that the French Government may try to drum up a further bid that would keep Alstom in French hands. The company itself has allowed a month to consider the options and take into account all stakeholder opinions.
In the mining space, there were rumours that Mick Davis, former CEO of Xstrata before its own mega-merger with Glencore last year, was planning a big comeback to the mining scene. His X2 investment vehicle has amassed a US$ 3.7 billion fighting fund and – if newspaper reports are to be believed – is interested in acquiring some of BHP Billiton’s unwanted assets, including its thermal coal business. That would be big news – but with all of the majors putting assets up for sale, there is no lack of potential targets for those with cash to splash.
Equipment suppliers have not been immune either with Mining Magazine counting four major acquisitions so far this year – and one major failure. To start with the one that fell through, Weir Minerals’ unsolicited £3.2 billion bid for Metso would have created the world’s largest mineral processing technology provider. The Finnish company roundly rejected Weir’s approach, saying it “sees no reason to commence discussions regarding a potential combination”. Charles Berry, Weir’s chairman, has since said there was “no certainty” as to whether it would table an improved bid – but that presumably means the Scottish company has not ruled it (or alternative purchases) out either.
Elswehere, Astec Industries, Hexagon AB, Wenco International Mining Systems and Joy Global all announced successful purchases of Telestack, MinTec, Automated Positioning Systems and selected assets of Mining Technologies International, respectively. And these are unlikely to be the last tie-ups: “There are some interesting opportunities out there and in the main I’d have to say that price expectations of sellers are tending to be pretty sensible,” Berry told The Scotsman. It looks like the M&A news writers are set for a busy year.