Canadian mining and metals deal value down 43% as focus on business fundamentals rises: Ernst & Young

Canadian mining and metals deal value down 43% as focus on business 
fundamentals rises: Ernst & Young 
Macroeconomic issues put damper on M&A, but confidence on the rise 
VANCOUVER, Nov. 28, 2012 /CNW/ - Global mining and metals deal value and 
volume are down globally, with Canadian numbers falling 43% and 16% year over 
year in the first nine months of 2012, according to Ernst & Young's seventh 
twice-yearly Global Capital Confidence Barometer. 
"Our survey results reveal that only 38% of companies, down from 53% in April, 
are focused on growth in the next 12 months, while 27% are refocusing on 
business fundamentals, including cost reduction and operational efficiency," 
says Bruce Sprague, Ernst & Young's Canadian mining and metals leader. 
Cost inflation, slowing economic growth, heightened geopolitical risk and 
volatile prices have sparked this shift in mining and metals companies' 
mindsets. 
"Executives are trading in their 'growth for growth's sake' mentality and 
refocusing on capital optimization," says Sprague. "Nearly a third of our 
survey respondents cited cost reduction and operational efficiencies as key 
priorities in the next year." 
But confidence in doing deals is improving, with 28% of respondents expecting 
to pursue an acquisition in the next 12 months. That's up from 18% in April. 
"While the value and volume of transactions is down, mining and metals 
companies' confidence in the current M&A environment is on the rise," says 
Sprague. "Expect to see companies move away from diversification and toward 
synergistic deals that create economies of scale and take advantage of low 
valuations across the sector." 
Smaller deals and strategic partnerships are on the boardroom agenda as 
companies manage pressure to generate returns on investment, especially in 
light of recent cost overruns and integration issues. 
"While many companies are refocusing on efficiency and cost control, risk 
management and capital allocation, new transaction opportunities exist for 
those with strong balance sheets — opportunities few can afford to miss out 
on in an era of intense global competition for resources," says Sprague. 
About the survey
Ernst & Young's Global Capital Confidence Barometer is a survey of more than 
1,500 senior executives from large companies around the world and across 
industry sectors. The Barometer's objectives are to gauge corporate confidence 
in the economic outlook, understand boardroom priorities over the next 12 
months, and identify the emerging capital practices that will distinguish 
companies that build competitive advantage as the global economy continues to 
evolve. This is the seventh twice-yearly Barometer in the series, which began 
in November 2009. 
About Ernst & Young 
Ernst & Young is a global leader in assurance, tax, transaction and advisory 
services. Worldwide, our 167,000 people are united by our shared values and an 
unwavering commitment to quality. We make a difference by helping our people, 
our clients and our wider communities achieve their potential. 
For more information, please visit ey.com/ca. 
Ernst & Young refers to the global organization of member firms of Ernst & 
Young Global Limited, each of which is a separate legal entity. Ernst & Young 
Global Limited, a UK company limited by guarantee, does not provide services 
to clients. 
Sarah Shields sarah.j.shields@ca.ey.com 604 648 3607 
Erika Bennett erika.bennett@ca.ey.com 416 943 5497 
SOURCE: Ernst & Young 
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CO: Ernst & Young
ST: Quebec
NI: ECOSURV ECO  
-0- Nov/28/2012 14:30 GMT
 
 
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