Friday, 05 Aug 2011
Reuters reported that deal advisers warn to expect more hostile deals in resources as cashed up miners turn desperate to snare targets, following Peabody Energy and ArcelorMittal's change of tack this week on their USD 5.3 billion bid for Macarthur Coal.
The pace of resources deals has picked up in recent weeks, putting the sector on track to top a record USD 120 billion in transactions this year, Ernst & Young predicts.
Deals are being fuelled by miners anxious to deploy the spoils from booming commodity markets, with some being forced to move into new sectors or regions, as the number of top tier assets available grows thin.
Mr Tim Day, head of UBS's Perth office, told Reuters that "There are fewer and fewer world class assets out there, so as people get more and more desperate, they may have no choice but to go hostile."
Knowing that suitors are hungry, takeover targets with bullish expectations are holding out for strong offers, while weak equity markets have depressed their shares, making it harder for deals to be sealed.
To help close that valuation gap and get deals done, suitors may have to go hostile, like Peabody and top steel maker ArcelorMittal in their chase for Australian coal miner Macarthur.
Mr Paul Murphy, Asia Pacific mining and metals transactions leader at Ernst & Young, told reporters that "With all the takeovers announced, pretty much all of them have been friendly. That could change."
Mr Day said Australia may still be attractive for Chinese gold investors, like Zijin Mining, China's top gold producer, which has bought just under 17% of Norton Gold Fields, potentially as a beachhead for further offshore expansion.
He said that "Australia makes a lot of sense for Chinese investors from a time zone perspective and offshore investment in gold assets aligns with their strategic diversification away from US dollars."
He predicted there would be more cross border deals in the gold sector, in contrast to the past year, dominated by deals done within Australia and Canada, like Kinross Gold's USD 7 billion takeover of Red Back Mining.
(Sourced from www.reuters.com)
Reuters reported that deal advisers warn to expect more hostile deals in resources as cashed up miners turn desperate to snare targets, following Peabody Energy and ArcelorMittal's change of tack this week on their USD 5.3 billion bid for Macarthur Coal.
The pace of resources deals has picked up in recent weeks, putting the sector on track to top a record USD 120 billion in transactions this year, Ernst & Young predicts.
Deals are being fuelled by miners anxious to deploy the spoils from booming commodity markets, with some being forced to move into new sectors or regions, as the number of top tier assets available grows thin.
Mr Tim Day, head of UBS's Perth office, told Reuters that "There are fewer and fewer world class assets out there, so as people get more and more desperate, they may have no choice but to go hostile."
Knowing that suitors are hungry, takeover targets with bullish expectations are holding out for strong offers, while weak equity markets have depressed their shares, making it harder for deals to be sealed.
To help close that valuation gap and get deals done, suitors may have to go hostile, like Peabody and top steel maker ArcelorMittal in their chase for Australian coal miner Macarthur.
Mr Paul Murphy, Asia Pacific mining and metals transactions leader at Ernst & Young, told reporters that "With all the takeovers announced, pretty much all of them have been friendly. That could change."
Mr Day said Australia may still be attractive for Chinese gold investors, like Zijin Mining, China's top gold producer, which has bought just under 17% of Norton Gold Fields, potentially as a beachhead for further offshore expansion.
He said that "Australia makes a lot of sense for Chinese investors from a time zone perspective and offshore investment in gold assets aligns with their strategic diversification away from US dollars."
He predicted there would be more cross border deals in the gold sector, in contrast to the past year, dominated by deals done within Australia and Canada, like Kinross Gold's USD 7 billion takeover of Red Back Mining.
(Sourced from www.reuters.com)
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