Vis
it o
ur m
etal
s in
dust
ry w
ebsi
te a
t w
ww
.pw
c.co
m/u
s/in
dust
rial
prod
ucts
© 2
012
Pric
ewat
erho
useC
oope
rs L
LP. A
ll ri
ghts
res
erve
d. “
Pric
ewat
erho
useC
oope
rs”
and
“Pw
C”
refe
r to
Pri
cew
ater
hous
eCoo
pers
LLP
, a D
elaw
are
limit
ed li
abili
ty p
artn
ersh
ip, o
r, a
s th
e co
ntex
t req
uire
s, th
e Pr
icew
ater
hous
eCoo
pers
glo
bal n
etw
ork
or o
ther
mem
ber fi r
ms
of th
e ne
twor
k, e
ach
of w
hich
is a
sep
arat
e le
gal e
ntit
y. T
his
docu
men
t is
for
gene
ral i
nfor
mat
ion
purp
oses
onl
y, a
nd s
houl
d no
t be
used
as
a su
bsti
tute
for
cons
ulta
tion
wit
h pr
ofes
sion
al a
dvis
ors.
MW
-12-
0199
kd
Spec
ial r
epor
t:U
sing
div
esti
ture
s and
sp
in-o
ffs t
o po
siti
on a
n or
gani
zati
on fo
r gr
owth
Forg
ing
ah
ead
Four
th-q
uart
er 2
011
glob
al
met
als
indu
stry
mer
gers
an
d ac
quis
itio
ns a
naly
sis
ww
w.p
wc.
com
/us/
indu
stri
alpr
oduc
ts
24
P
wC
Met
ho
do
logy
Forg
ing
ahea
d is
an
anal
ysis
of m
erge
r an
d ac
quis
itio
n ac
tivi
ty in
the
glob
al m
etal
s in
dust
ry. D
eal i
nfor
mat
ion
was
sou
rced
from
Tho
mso
n R
eute
rs a
nd in
clud
es d
eals
for
targ
ets
wit
h pr
imar
y SI
C c
odes
that
fall
into
one
of t
he
follo
win
g in
dust
ry g
roup
s: ir
on o
res;
ferr
oallo
y or
es, e
xcep
t va
nadi
um; s
teel
wor
ks, b
last
furn
aces
, rol
ling
mill
s, a
nd
fi nis
hing
mill
s; ir
on a
nd s
teel
foun
drie
s; p
rim
ary
smel
ting
an
d refi n
ing/
nonf
erro
us; s
econ
dary
sm
elti
ng a
nd r
efi n
ing/
nonf
erro
us; r
ollin
g, d
raw
ing,
and
ext
rudi
ng/n
onfe
rrou
s;
nonf
erro
us fo
undr
ies;
mis
cella
neou
s pr
imar
y m
etal
s pr
oduc
ts; a
nd m
etal
s se
rvic
e ce
nter
s an
d offi c
es. B
alan
ce
shee
t dat
a w
as s
ourc
ed fr
om p
ublic
com
pany
rep
orts
.
This
ana
lysi
s in
clud
es a
ll in
divi
dual
mer
gers
and
ac
quis
itio
ns fo
r di
sclo
sed
or u
ndis
clos
ed v
alue
s, le
vera
ged
buyo
uts,
pri
vati
zati
ons,
min
orit
y st
ake
purc
hase
s, a
nd
acqu
isit
ions
of r
emai
ning
inte
rest
ann
ounc
ed b
etw
een
Janu
ary
1, 2
010,
and
Dec
embe
r 31
, 201
1, w
ith
a st
atus
of
com
plet
ed, i
nten
ded,
par
tial
ly c
ompl
eted
, pen
ding
, pen
ding
re
gula
tory
app
rova
l, un
cond
itio
nal (
i.e. i
niti
al c
ondi
tion
s se
t for
th b
y th
e ac
quir
er h
ave
been
met
but
dea
l has
not
been
com
plet
ed),
or
wit
hdra
wn.
The
term
dea
l, w
hen
refe
renc
ed h
erei
n, r
efer
s to
tran
sact
ions
wit
h a
disc
lose
d va
lue
of a
t lea
st $
50 m
illio
n un
less
oth
erw
ise
note
d.
Reg
iona
l cat
egor
ies
used
in th
is re
port
app
roxi
mat
e U
nite
d N
atio
ns (
UN
) re
gion
al g
roup
s, a
s de
term
ined
by
the
UN
Sta
tistic
s D
ivis
ion,
wit
h th
e ex
cept
ion
of th
e N
orth
A
mer
ica
regi
on (
incl
udes
Nor
th A
mer
ica,
Lat
in A
mer
ica,
an
d th
e C
arib
bean
UN
gro
ups)
, the
Asi
a an
d O
cean
ia re
gion
(i
nclu
des
Asi
a an
d O
cean
ia U
N g
roup
s), a
nd E
urop
e (d
ivid
ed
into
Uni
ted
King
dom
and
Eur
ozon
e an
d Eu
rope
ex-
UK
an
d Eu
rozo
ne re
gion
s). I
nter
natio
nal M
onet
ary
Fund
cl
assifi c
atio
ns w
ere
used
to la
bel e
cono
mie
s as
adv
ance
d or
de
velo
ping
and
em
ergi
ng. O
vers
eas
terr
itori
es w
ere
incl
uded
in
the
regi
on o
f the
par
ent c
ount
ry. C
hina
, whe
n re
fere
nced
se
para
tely
, inc
lude
s H
ong
Kong
.
Com
peti
ng d
eals
, not
just
the
ulti
mat
e su
cces
sful
dea
l pa
rtne
r, w
ere
incl
uded
in th
e da
ta s
et u
sed
thro
ugho
ut th
e do
cum
ent.
Fo
rgin
g a
hea
d
1
To o
ur
met
als
ind
ust
ry r
ead
ers:
Wel
com
e to
the
late
st e
diti
on o
f For
ging
ahe
ad, P
wC
’s an
alys
is o
f mer
gers
and
acq
uisi
tion
s in
the
glob
al m
etal
s in
dust
ry. I
n th
is r
epor
t, y
ou’ll
fi nd
an
over
view
of M
&A
in th
e se
ctor
du
ring
the
four
th q
uart
er o
f 201
1, p
lus
expe
ctat
ions
for
deal
act
ivit
y in
the
near
futu
re.
We
also
incl
ude
a sp
ecia
l sec
tion
on
the
impa
ct o
f div
esti
ture
s an
d sp
in-o
ffs,
incr
easi
ngly
vi
ewed
as
esse
ntia
l str
ateg
ies
for
help
ing
com
pani
es to
bet
ter
posi
tion
them
selv
es fo
r gr
owth
opp
ortu
niti
es.
PwC
ana
lyst
s po
int t
o se
vera
l tre
nds
affe
ctin
g th
e va
lues
and
loca
tion
s of
dea
ls in
the
met
als
sect
or:
• In
dea
ls v
alue
d at
$50
mil
lion
or
mor
e, th
e av
erag
e va
lue
incr
ease
d by
mor
e th
an
20%
ove
r th
e th
ird
quar
ter,
ste
mm
ing
from
incr
ease
d m
ega-
deal
act
ivit
y (d
eals
val
ued
at $
1 bi
llion
or
mor
e). O
vera
ll de
al v
olum
e an
d va
lue
incr
ease
d as
wel
l. Fo
r 20
11,
how
ever
, ave
rage
dea
l val
ue d
eclin
ed c
ompa
red
wit
h 20
10; t
he h
igh
aver
age
of
2010
larg
ely
stem
med
from
the
BH
P-B
illit
on d
eal d
urin
g th
e se
cond
qua
rter
that
w
as la
ter
wit
hdra
wn.
• C
ash
bal
ance
s h
ave
incr
ease
d ov
er th
e la
st tw
o ye
ars,
whi
le d
ebt t
o ca
pita
l rat
ios
have
de
clin
ed, s
ugge
stin
g th
at a
cqui
rers
are
bec
omin
g be
tter
cap
ital
ized
ove
r th
e lo
ng te
rm.
Stoc
k-sw
ap d
eals
hav
e in
crea
sed,
poi
ntin
g to
the
pote
ntia
l for
equ
ity-
fund
ed e
xpan
sion
, bu
t lev
erag
ed b
uyou
ts h
ave
decl
ined
, ind
icat
ing
that
fi na
ncia
l inv
esto
rs m
ay b
e re
luct
ant t
o en
gage
in d
eals
.
• Th
ree
meg
a-de
als
wer
e an
noun
ced
in 4
Q11
: the
pro
pose
d ac
quis
itio
ns o
f Chi
na’s
Heb
ei S
houg
ang
Qia
n’an
Iron
& S
teel
, Bra
zil’s
Usi
na S
ider
urgi
cas
de M
inas
Ger
ais,
and
th
e U
S-ba
sed
Com
mer
cial
Met
als.
The
dea
ls, w
orth
$7.
36 b
illio
n, c
ompr
ised
mor
e th
an
half
of t
he to
tal f
or d
eals
val
ued
at $
50 m
illio
n or
mor
e.
• A
sia
and
Oce
ania
dro
ve o
vera
ll r
egio
nal d
eal v
alue
in 2
011.
And
a r
epea
t is
likel
y in
20
12. C
hina
con
tinu
es to
con
solid
ate
its
dom
esti
c m
etal
s in
dust
ry a
s pa
rt o
f its
Tw
elft
h Fi
ve Y
ear
Plan
.
Whi
le s
teel
pri
ces
seem
to h
ave
stab
ilize
d, e
xpec
tati
ons
are
that
201
2 w
ill b
ring
a s
low
dow
n in
the
stee
l ind
ustr
y, g
iven
wea
keni
ng g
loba
l dem
and
and
tigh
ter
cont
rol o
f the
Chi
nese
rea
l es
tate
mar
ket.
Con
sequ
entl
y, m
etal
s de
als
will
gro
w o
nly
mod
erat
ely,
wit
h ro
bust
incr
ease
s in
M&
A u
nlik
ely
unti
l met
al p
rice
s an
d ot
her
fund
amen
tals
impr
ove.
We’
re p
leas
ed to
pre
sent
the
four
th-q
uart
er 2
011
edit
ion
of F
orgi
ng a
head
as
a pa
rt o
f our
on
goin
g co
mm
itm
ent t
o pr
ovid
ing
a be
tter
und
erst
andi
ng o
f M&
A tr
ends
and
pro
spec
ts in
th
e in
dust
ry.
Rob
ert M
cCut
cheo
n Ji
m F
orbe
sU
S M
etal
s Le
ader
G
loba
l Met
als
Lead
er
Rob
ert M
cCut
cheo
n
Jim
For
bes
2
Pw
C
Spec
ial r
epo
rt:
Usi
ng d
ives
titur
es a
nd s
pin-
offs
to p
ositi
on a
n or
gani
zatio
n fo
r gro
wth
Glo
bal m
erge
r an
d ac
quis
itio
n ac
tivi
ty h
as r
isen
sig
nifi c
antl
y in
rec
ent y
ears
, inc
reas
ing
to $
2.54
trill
ion
in 2
011,
a 7
.6%
ju
mp
over
201
0.1 U
S M
&A
act
ivit
y is
exp
ecte
d to
con
tinu
e at
th
e cu
rren
t pac
e th
roug
h 20
12 a
nd c
ould
acc
eler
ate
if th
ere
is in
crea
sed
acce
ss to
cap
ital
.2 M&
A a
ctiv
ity
has
show
n a
rise
in th
e nu
mbe
r an
d va
lue
of d
ives
titu
res
and
spin
-off
s.
US
dive
stit
ure
deal
vol
ume
as a
per
cent
age
of to
tal M
&A
vo
lum
e in
crea
sed
to 3
6% in
201
1 fr
om 3
5% in
201
0,
acco
rdin
g to
Pw
C.3
Alt
houg
h di
vest
itur
e ac
tivi
ty h
as in
crea
sed,
the
tran
sact
ions
ha
ve ta
ken
long
er to
clo
se th
an in
pre
viou
s ye
ars.
Som
e co
mpa
nies
hav
e be
en fo
rced
to g
o to
mar
ket s
ever
al ti
mes
be
fore
suc
cess
fully
str
ikin
g de
als
wit
h bu
yers
. Als
o sl
owin
g su
ch d
eals
are
the
follo
win
g:
• Ti
ghte
r le
ndin
g st
anda
rds
for
a sm
alle
r po
ol o
f buy
ers
• In
vest
ors
mad
e sk
itti
sh b
y vo
lati
le s
tock
mar
kets
• So
vere
ign
debt
cri
ses
in E
urop
e an
d th
e U
nite
d St
ates
• A
n un
cert
ain
econ
omic
fore
cast
• Sh
rink
ing
gove
rnm
ent s
pend
ing
Thir
d-pa
rty
lend
ers
and
othe
r co
nsti
tuen
ts a
re r
equi
ring
m
ore
dilig
ence
, and
, eve
n w
hen
they
don
’t, b
uyer
s ar
e be
ing
mor
e ca
utio
us. I
n th
e m
id-s
ize
mar
ket,
cor
pora
te b
uyer
s ha
ve b
een
prep
ared
to p
ay s
tron
ger
mul
tipl
es fo
r th
e hi
ghes
t-qu
alit
y in
dust
rial
pro
duct
s bu
sine
sses
. Pro
cess
es
are
also
bei
ng s
truc
ture
d to
bet
ter
bene
fi t tr
ade
buye
rs, a
s ve
ndor
s ar
e ab
le to
pro
vide
them
wit
h m
ore
acce
ss to
m
anag
emen
t and
mor
e ti
me,
alt
houg
h th
ey e
xpec
t to
be
paid
for
thei
r sy
nerg
ies.
Buy
ers
also
are
oft
en m
ore
aggr
essi
ve in
see
king
a p
rice
be
low
the
valu
e so
ught
by
selle
rs. B
ut m
any
com
pani
es
cont
inue
to v
iew
div
esti
ture
s an
d sp
in-o
ffs
as e
ffec
tive
st
rate
gies
for
shed
ding
non
core
bus
ines
ses,
rig
htsi
zing
thei
r or
gani
zati
ons,
and
pro
vidi
ng a
pla
tfor
m fo
r gr
owth
.
Spin
-off
s w
ere
on th
e ri
se in
201
1 as
an
attr
acti
ve w
ay fo
r co
mpa
nies
to s
epar
ate
thei
r hi
gh-g
row
th o
r lo
w-g
row
th
com
pone
nts
from
mor
e tr
adit
iona
l pie
ces
of th
e bu
sine
ss.
Such
was
the
case
wit
h se
vera
l hig
h-pr
ofi le
tran
sact
ions
, in
clud
ing
ITT’
s sp
lit in
to th
ree
publ
icly
trad
ed c
ompa
nies
, M
otor
ola’
s sp
in-o
ff o
f its
mob
ile p
hone
div
isio
n, M
cGra
w-
Hill
’s sp
in-o
ff o
f its
edu
cati
onal
uni
t, L
-3’s
anno
unce
d sp
in-o
ff o
f sev
eral
gov
ernm
ent s
ervi
ces
busi
ness
es, a
nd
Sara
Lee
’s sp
in-o
ff o
f its
inte
rnat
iona
l bev
erag
e bu
sine
ss.
The
met
als
sect
or h
as s
een
M&
A a
ctiv
ity
incr
ease
, too
. The
12
2 d
eals
wit
h a
disc
lose
d va
lue
grea
ter
than
$50
mill
ion
and
a to
tal d
eal v
alue
of $
55.2
bill
ion
dur
ing
2011
co
mpa
res
wit
h 10
6 de
als
and
$92.
6 bi
llion
in d
eal v
alue
in
201
0. D
ives
titu
res
and
spin
-off
s ac
coun
ted
for
38.5
% o
f de
al a
ctiv
ity
in th
e se
ctor
dur
ing
2011
.
Am
ong
the
driv
ers
of s
pin-
offs
and
div
esti
ture
s in
the
met
als
sect
or:
• Sh
ifts
in th
e va
lue
chai
n, w
ith
upw
ard
pric
ing
pres
sure
in
raw
mat
eria
ls a
nd c
omm
odit
ies
crea
ting
cha
lleng
es
for
conv
erte
rs c
ompa
red
wit
h th
e co
mpa
nies
that
are
ve
rtic
ally
inte
grat
ed. G
oing
forw
ard,
wha
t will
the
profi
t m
argi
ns lo
ok li
ke if
the
indu
stry
shi
fts
tow
ard
com
mod
ity
prod
ucer
s?
• Po
rtfo
lio r
atio
naliz
atio
n, w
ith
com
pani
es m
akin
g de
cisi
ons
hing
ing
on w
hich
bus
ines
ses
they
bel
ieve
will
be
profi t
able
in th
e fu
ture
and
whi
ch w
ill n
ot.
• C
once
rns
rega
rdin
g ge
ogra
phic
foot
prin
ts in
mar
kets
. C
erta
in c
ount
ries
or
regi
ons
may
not
be
as p
rofi t
able
as
in p
revi
ous
year
; it m
ay b
e ri
sky
to d
ives
t of a
sset
s in
th
ose
mar
kets
.
• A
ref
ocus
ing
on c
ore
com
pete
ncie
s an
d sh
eddi
ng o
f no
ncor
e bu
sine
sses
.
• Pr
essu
res
from
dis
tres
sed
mar
kets
, par
ticu
larl
y in
Eur
ope.
• In
tere
st fr
om s
trat
egic
buy
ers
wit
h m
ore
inte
grat
ed
oper
atio
ns o
r fr
om fi
nanc
ial b
uyer
s se
ekin
g to
m
ake
thei
r bu
sine
sses
mor
e at
trac
tive
to fu
ture
st
rate
gic
buye
rs.
1 “
On
Wal
l Str
eet,
Ren
ewed
Op
timis
m f
or D
eal-
Mak
ing,
” b
y E
vely
n M
. Rus
li, T
he N
ew Y
ork
Tim
es, J
an. 2
, 201
2.2
“‘H
unt
for
Gro
wth
to
driv
e 20
12 U
S M
erge
rs &
Acq
uisi
tions
,’ sa
ys P
wC
US
,” P
wC
, 201
2.3
ibid
.
Fo
rgin
g a
hea
d
23
Co
nta
cts
Pw
C G
lob
al T
ran
sact
ion
Ser
vice
s p
ract
ice
PwC
’s Tr
ansa
ctio
n Se
rvic
es p
ract
ice
offe
rs a
full
rang
e of
tax,
fi na
ncia
l, bu
sine
ss a
ssur
ance
, and
adv
isor
y ca
pabi
litie
s co
veri
ng a
cqui
siti
ons,
dis
posa
ls, p
riva
te e
quit
y, s
trat
egic
M&
A a
dvic
e, a
dvic
e on
list
ed c
ompa
ny tr
ansa
ctio
ns, fi
nan
cing
, an
d pu
blic
-pri
vate
par
tner
ship
s.
Pw
C G
lob
al M
eta
ls p
ract
ice
PwC
’s M
etal
s pr
actic
e pr
ovid
es in
dust
ry-f
ocus
ed a
ssur
ance
, tax
, and
adv
isor
y se
rvic
es. T
hrou
gh o
ur g
loba
l net
wor
k, w
e m
ay
draw
upo
n th
e in
-dep
th in
dust
ry e
xper
ienc
e of
pro
fess
iona
ls in
eve
ry c
ount
ry in
whi
ch y
our c
ompa
ny o
pera
tes.
Our
peo
ple
may
hel
p yo
u de
al w
ith
the
chal
leng
es o
f tod
ay, a
nd th
ey u
nder
stan
d th
e im
plic
atio
ns fo
r tom
orro
w.
US
Met
als
Indu
stry
Lea
der
Rob
ert M
cCut
cheo
n —
+1.
412.
355.
2935
ro
bert
.w.m
ccut
cheo
n@us
.pw
c.co
m
US
Met
als
Tax
Lead
erM
ike
Tom
era
— +
1.41
2.35
5.60
95m
icha
el.to
mer
a@us
.pw
c.co
m
US
Met
als
Adv
isor
y Le
ader
Jeff
Her
rman
n —
+1.
216.
825.
3116
jeff
.her
rman
n@us
.pw
c.co
m
US
Met
als
Tran
sact
ion
Serv
ices
Dir
ecto
r Jo
aqui
n O
live
ras
— +
1.64
6.47
1.09
26
joaq
uin.
oliv
eras
@us
.pw
c.co
m
US
Met
als
Clie
nt S
ervi
ce A
dvis
orD
anie
l Web
ster
— +
1.41
2.35
5.77
97
dani
el.w
.web
ster
@us
.pw
c.co
m
Glo
bal M
etal
s Le
ader
Jim
For
bes
— +
1.90
5.97
2.41
05jim
.forb
es@
ca.p
wc.
com
US
Indu
stri
al P
rodu
cts
Dir
ecto
rTh
omas
Wal
ler
— +
1.97
3.23
6.45
30
thom
as.a
.wal
ler@
us.p
wc.
com
US
Met
als
Lead
Ana
lyst
Sean
Gaf
fney
— +
1.41
2.35
5.77
15
sean
.gaf
fney
@us
.pw
c.co
m
Edit
oria
l Con
trib
utor
Ph
ilip
Boo
th —
+1.
813.
348.
7815
phili
p.bo
oth@
us.p
wc.
com
US
Tran
sact
ion
Serv
ices
, Ass
uran
ceB
rian
Vic
krey
— +
1.31
2.29
8.29
30
bria
n.vi
ckre
y@us
.pw
c.co
m
US
Tran
sact
ion
Serv
ices
, Tax
Mic
hae
l Kli
egm
an —
+1.
646.
471.
8213
mic
hael
.klie
gman
@us
.pw
c.co
m
US
Tran
sact
ion
Serv
ices
, Mer
ger
Inte
grat
ion
Dav
id L
imbe
rg —
+1.
216.
875.
3506
da
vid.
limbe
rg@
us.p
wc.
com
Glo
bal T
rans
acti
on S
ervi
ces
Lead
erC
olin
McK
ay —
+1.
646.
471.
5200
co
lin.m
ckay
@us
.pw
c.co
m
US
Tran
sact
ion
Serv
ices
Lea
der
Joh
n M
cCaf
frey
— +
1.41
5.49
8.61
50
john
.p.m
caff
rey@
us.p
wc.
com
Euro
pe T
rans
acti
on S
ervi
ces
Lead
erPh
illi
ppe
Deg
onza
gue
— +
33.0
1.56
57.1
293
phill
ippe
.deg
onza
gue@
fr.p
wc.
com
Asi
a-Pa
cifi c
Tra
nsac
tion
Ser
vice
s Le
ader
Cha
o C
hoon
Ong
—+
65.6
236.
3018
chao
.cho
on.o
ng@
sg.p
wc.
com
Pw
C C
orp
ora
te F
ina
nce
glo
ba
l net
wo
rk
For
Cor
pora
te F
inan
ce s
ervi
ces
in th
e U
nite
d St
ates
pl
ease
con
tact
:
US
Indu
stri
al P
rodu
cts
Cor
pora
te F
inan
ce L
eade
rPr
icew
ater
hous
eCoo
pers
Cor
pora
te F
inan
ce L
LCR
akes
h K
otec
ha —
+1.
312.
298.
2895
rake
sh.r
.kot
echa
@us
.pw
c.co
m
For
Cor
pora
te F
inan
ce s
ervi
ces
outs
ide
the
Uni
ted
Stat
espl
ease
con
tact
:
Glo
bal C
orpo
rate
Fin
ance
Lea
der
Chr
is H
emm
ings
— +
44.2
0.78
0.45
703
chri
s.he
mm
ings
@uk
.pw
c.co
m
22
P
wC
Pw
C’s
met
als
exp
erie
nce
Dee
p m
eta
ls e
xper
ien
ce
PwC
con
tinu
es to
hav
e th
e le
adin
g Fo
rtun
e G
loba
l 500
m
arke
t sha
re in
the
met
als
indu
stry
. Our
Met
als
prac
tice
se
rves
ferr
ous
and
nonf
erro
us p
rim
ary
and
seco
ndar
y m
etal
s pr
oduc
ers
thro
ugh
a ne
twor
k of
mor
e th
an 1
,000
pr
ofes
sion
als
stra
tegi
cally
loca
ted
arou
nd th
e w
orld
. Cen
tral
to
the
succ
essf
ul d
eliv
ery
of o
ur s
ervi
ces
is a
n in
-dep
th
unde
rsta
ndin
g of
toda
y’s
indu
stry
issu
es, i
n ad
diti
on to
our
w
ealt
h of
indu
stry
res
ourc
es a
nd “
best
pra
ctic
es”
that
hel
p in
sol
ving
com
plex
bus
ines
s ch
alle
nges
. Our
hig
hly
skill
ed
team
enc
oura
ges
dial
ogue
on
tren
ds a
nd is
sues
thro
ugh
part
icip
atio
n in
indu
stry
con
fere
nces
and
ass
ocia
tion
s, s
uch
as th
e A
mer
ican
Iron
and
Ste
el In
stit
ute,
as
wel
l as
thro
ugh
indu
stry
-foc
used
pub
licat
ions
and
Web
foru
ms.
To
addr
ess
your
indu
stry
nee
ds w
here
ver
they
ari
se, o
ur p
rofe
ssio
nals
ar
e co
ncen
trat
ed in
are
as w
here
the
met
als
indu
stry
op
erat
es to
day
and
in th
e em
ergi
ng m
arke
ts w
here
it
will
ope
rate
in th
e fu
ture
.
Qu
ali
ty d
eal p
rofe
ssio
na
ls
PwC
’s Tr
ansa
ctio
n Se
rvic
es p
ract
ice,
wit
h m
ore
than
6,5
00
dedi
cate
d de
al p
rofe
ssio
nals
wor
ldw
ide,
has
the
righ
t in
dust
ry a
nd fu
ncti
onal
exp
erie
nce
to a
dvis
e yo
u on
var
ious
fa
ctor
s th
at c
ould
aff
ect a
tran
sact
ion,
incl
udin
g m
arke
t,
fi nan
cial
acc
ount
ing,
tax,
hum
an r
esou
rces
, ope
rati
ng, I
T,
and
supp
ly c
hain
con
side
rati
ons.
Tea
med
wit
h ou
r M
etal
s pr
acti
ce, o
ur tr
ansa
ctio
n pr
ofes
sion
als
may
bri
ng a
uni
que
pers
pect
ive
to y
our
deal
, add
ress
ing
it fr
om a
tech
nica
l as
pect
as
wel
l as
from
an
indu
stry
poi
nt o
f vie
w.
Glo
ba
l co
nn
ecti
on
In a
ddit
ion
to th
e m
ore
than
1,0
00 p
rofe
ssio
nals
who
se
rve
the
met
als
indu
stry
, our
team
is p
art o
f an
expa
nsiv
e In
dust
rial
Pro
duct
s gr
oup
that
con
sist
s of
mor
e th
an 3
2,00
0 pr
ofes
sion
als,
incl
udin
g ap
prox
imat
ely
17,0
00 p
rovi
ding
as
sura
nce
serv
ices
, 8,3
00 p
rovi
ding
tax
serv
ices
, and
7,0
00
prov
idin
g ad
viso
ry s
ervi
ces.
Thi
s ex
pand
s ou
r gl
obal
fo
otpr
int a
nd e
nabl
es u
s to
con
cent
rate
eff
orts
in b
ring
ing
clie
nts
a gr
eate
r de
pth
of ta
lent
, res
ourc
es, a
nd k
now
-how
in
the
mos
t eff
ecti
ve a
nd ti
mel
y w
ay.
Sout
h A
mer
ica
1,96
0 In
dust
rial
Pro
duct
s pr
ofes
sion
als
155
Met
als
indu
stry
pro
fess
iona
ls
Nor
th A
mer
ica
5,70
0 In
dust
rial
Pro
duct
s pr
ofes
sion
als
225
Met
als
indu
stry
pro
fess
iona
ls
Euro
pe12
,700
Indu
stri
al P
rodu
cts
prof
essi
onal
s31
5 M
etal
s in
dust
ry p
rofe
ssio
nals
Mid
dle
East
& A
fric
a1,
360
Indu
stri
al P
rodu
cts
prof
essi
onal
s46
Met
als
indu
stry
pro
fess
iona
ls
Asi
a9,
000
Indu
stri
al P
rodu
cts
prof
essi
onal
s19
5 M
etal
s in
dust
ry p
rofe
ssio
nals
Aus
tral
ia &
Pac
ifi c
Isla
nds
1,00
0 In
dust
rial
Pro
duct
s pr
ofes
sion
als
70 M
etal
s in
dust
ry p
rofe
ssio
nals
Fo
rgin
g a
hea
d
3
Dri
vin
g sp
in-o
ffs
an
d d
ives
titu
res
Spin
-off
s ar
e of
ten
the
way
to d
ispo
se o
f a b
usin
ess
whi
le
pres
ervi
ng s
hare
hold
er v
alue
. For
bus
ines
ses
wit
h si
gnifi
cant
app
reci
ated
val
ue, t
hey
are
a so
und
stra
tegy
in
stea
d of
a s
ale,
whi
ch m
ay tr
igge
r a
larg
e ta
xabl
e ga
in. A
sp
in-o
ff is
a ta
x-fr
ee tr
ansa
ctio
n th
at a
llow
s sh
areh
olde
rs to
m
aint
ain
thei
r ap
prec
iate
d va
lue
wit
hout
trig
geri
ng a
gai
n.
This
cha
ract
eris
tic
allo
ws
shar
ehol
ders
to p
rese
rve
capi
tal
gain
s tr
eatm
ent a
nd c
ontr
ol th
e ti
min
g of
the
real
izat
ion
of
the
gain
. Fol
low
ing
the
repe
al o
f the
Gen
eral
Uti
litie
s D
octr
ine,
a ta
x-fr
ee S
ecti
on 3
55 s
pin-
off m
ay b
e th
e on
ly
rem
aini
ng m
eans
by
whi
ch a
cor
pora
tion
may
ext
ract
ap
prec
iate
d as
sets
wit
hout
pay
ing
corp
orat
e-le
vel t
ax.
Selli
ng a
long
-sta
ndin
g un
it o
f a c
ompa
ny c
an b
e a
diffi
cul
t,
and
ofte
n co
ntro
vers
ial,
deci
sion
for
an o
rgan
izat
ion,
pa
rtic
ular
ly if
mem
bers
of t
he m
anag
emen
t tea
m h
ave
ties
to
the
unit
bei
ng d
ives
ted.
But
by
selli
ng a
bus
ines
s un
it
that
is n
o lo
nger
par
t of t
he c
ore
stra
tegy
bec
ause
it m
ay b
e po
orly
per
form
ing,
in a
con
trac
ting
mar
ket,
or
sim
ply
no
long
er a
pri
orit
y, a
com
pany
may
rai
se c
apit
al to
inve
st in
it
s st
rate
gic
prio
riti
es a
nd a
llow
the
busi
ness
uni
t to
do th
e sa
me,
pos
sibl
y en
hanc
ing
over
all s
hare
hold
er v
alue
.
By
taki
ng s
uch
an a
ppro
ach,
an
orga
niza
tion
may
gai
n th
e fi n
anci
al r
esou
rces
to in
ject
add
itio
nal f
undi
ng in
to it
s co
re
busi
ness
. It m
ay r
efoc
us o
n es
sent
ial a
spec
ts o
f the
bus
ines
s th
at h
elp
defi n
e th
e or
gani
zati
on a
nd la
unch
key
pro
ject
s th
at m
ay h
ave
been
del
ayed
. The
se in
itia
tive
s m
ay a
llow
the
com
pany
to im
prov
e it
s ov
eral
l per
form
ance
. The
infu
sion
of
cas
h m
ay a
lso
help
a c
ompa
ny s
hed
its
debt
.
Add
itio
nally
, cer
tain
sel
lers
are
inte
rest
ed in
acq
uiri
ng
capi
tal a
s co
mpa
nies
look
to r
estr
uctu
re th
eir
bala
nce
shee
ts
by b
uild
ing
up c
ash
rese
rves
or
payi
ng d
own
debt
. Sel
ling
a hi
gh-p
erfo
rmin
g or
hig
h-va
lue
busi
ness
uni
t at a
des
irab
le
pric
e m
ay g
o a
long
way
tow
ard
help
ing
a co
mpa
ny a
chie
ve
such
a g
oal.
Na
viga
tin
g a
ch
all
engi
ng
pro
cess
Cor
pora
te s
elle
rs o
ften
del
ay m
akin
g di
vest
itur
e de
cisi
ons
than
ks to
the fi n
anci
al a
nd lo
gist
ical
cha
lleng
es o
f tim
ing,
va
luat
ion,
and
pot
enti
al p
ushb
ack
from
man
agem
ent t
eam
s ru
nnin
g ta
rget
ed b
usin
ess
unit
s. P
arti
cipa
nts
in a
Pw
C
roun
dtab
le o
n di
vest
itur
e st
rate
gies
and
sol
utio
ns n
oted
th
at fa
iling
to a
dequ
atel
y co
nsid
er th
ese
fact
ors
may
co
ntri
bute
to a
por
tfol
io r
evie
w th
at is
poo
rly
plan
ned,
in
turn
dri
ving
unh
ealt
hy o
r co
nfl ic
ting
ince
ntiv
es a
cros
s an
or
gani
zati
on. S
uch
a dy
nam
ic m
ay le
ad to
inst
itut
iona
l re
sist
ance
to id
enti
fyin
g di
vest
itur
e ca
ndid
ates
and
can
ul
tim
atel
y ha
mpe
r or
der
ail d
ives
titu
re e
ffor
ts. T
imin
g,
pric
e, a
nd e
ase
are
prio
riti
es to
bal
ance
whe
n ev
alua
ting
ca
ndid
ates
for
dive
stit
ure.
Onc
e m
ovin
g fo
rwar
d w
ith
a di
vest
itur
e, le
ader
ship
and
inve
stor
s m
ay fo
cus
on th
e fu
ture
of
the
core
bus
ines
s an
d ex
pedi
ting
the
dive
stit
ure
to li
mit
ex
ecut
ive
and
inve
stor
dis
trac
tion
s.4
The
road
to c
losi
ng a
lso
may
be
long
and
com
plex
, wit
h gl
obal
eco
nom
ic u
ncer
tain
ty in
crea
sing
ly le
adin
g bu
yers
to
exp
ect a
nd d
eman
d m
ore
deta
iled
data
abo
ut a
targ
et
com
pany
. Mor
e in
tens
ive
and
exte
nsiv
e du
e di
ligen
ce is
ex
tend
ing
the
dive
stit
ure
proc
ess.
4 “
Div
estit
ure
stra
tegi
es a
nd s
olut
ions
,” P
wC
, 200
9.5
“D
ives
titur
es in
diffi
cul
t tim
es,”
Pw
C, 2
009.
Com
pani
es in
rece
nt y
ears
hav
e bec
ome a
war
e of
gap
s in
thei
r app
roac
h to
div
estit
ures
: Nea
rly
half
of th
e C-s
uite
exe
cutiv
es a
nd co
rpor
ate
deve
lopm
ent d
irec
tors
resp
ondi
ng to
a P
wC
su
rvey
repo
rted
thei
r acq
uisi
tion
proc
ess w
as
bett
er d
efi n
ed th
an th
eir d
ives
titur
e pro
cess
.
Mor
e tha
n ha
lf of
resp
onde
nts i
n th
e sam
e sur
vey
said
that
rece
nt d
ives
titur
es h
ad ta
ken
at le
ast
20%
long
er to
com
plet
e tha
n in
pre
viou
s yea
rs.5
4
Pw
C
For
a co
rpor
ate
enti
ty, d
ives
titu
res
typi
cally
are
far
less
co
mm
on th
an a
cqui
siti
ons.
Con
sequ
entl
y, th
ere
are
grea
t ch
alle
nges
whe
n it
com
es to
eff
ecti
vely
man
agin
g th
e pr
oces
s an
d dr
awin
g on
thei
r te
am’s
expe
rien
ces.
Any
co
mpa
ny p
lann
ing
an a
cqui
siti
on m
ay o
btai
n si
gnifi
cant
va
lue
and
mee
t its
bus
ines
s ca
se b
y ch
oosi
ng th
e ap
prop
riat
e ta
rget
, ach
ievi
ng p
lann
ed s
yner
gies
, and
ef
fect
ivel
y in
tegr
atin
g th
e ta
rget
. A m
anag
emen
t tea
m
accu
stom
ed to
ser
ial a
cqui
siti
ons
may
con
duct
thes
e ac
tivi
ties
as
core
cap
abili
ties
. How
ever
, the
ski
lls a
re
not a
s re
leva
nt fo
r a
dive
stit
ure.
Ove
r th
e ye
ars,
a c
ompa
ny r
efi n
es th
e lis
t of t
arge
ts it
wou
ld
seek
to a
cqui
re a
t the
app
ropr
iate
tim
e an
d pr
ice,
and
m
anag
emen
t pay
s cl
ose
atte
ntio
n to
the
targ
ets,
som
e of
w
hich
may
be
com
peti
tors
. Ide
ntif
ying
a th
orou
gh li
st o
f bu
yers
may
be
mor
e ch
alle
ngin
g to
man
agem
ent t
eam
s —
fo
r ex
ampl
e, w
hen
suit
able
buy
ers
may
not
wor
k di
rect
ly in
th
e sa
me
indu
stry
but
inst
ead
may
be
seek
ing
to e
nter
it.
Con
sequ
entl
y, s
elle
rs a
re p
ayin
g cl
oser
att
enti
on to
how
th
ey m
anag
e th
e di
vest
itur
e pr
oces
s, fr
om s
tart
to fi
nish
. Th
ey fr
eque
ntly
ass
embl
e a
team
ded
icat
ed to
man
agin
g an
d ex
ecut
ing
the
deal
and
the
oper
atio
nal s
epar
atio
n si
mul
tane
ousl
y.
To c
lose
dea
ls a
nd in
crea
se th
e va
lue
of th
eir
asse
ts, s
elle
rs
are
stri
ving
to g
ain
a be
tter
, mor
e de
taile
d un
ders
tand
ing
of
the
com
plex
itie
s of
the
dive
stit
ure
mar
ket.
The
y ar
e ga
ugin
g th
e w
ide
scop
e of
buy
er c
once
rns
and
resp
ondi
ng to
the
glob
al e
cono
mic
cri
ses
that
hav
e ch
ange
d th
e ru
les
of th
e ga
me,
req
uiri
ng a
twea
k in
str
ateg
ies.
The
over
ridi
ng g
oal i
s to
eva
luat
e th
e bu
sine
ss fr
om a
bu
yer’
s pe
rspe
ctiv
e an
d be
tter
pos
itio
n it
for
sale
. Red
ucin
g or
avo
idin
g de
lays
alt
oget
her
may
be
esse
ntia
l to
mai
n-ta
inin
g th
e de
sire
d va
lue
of th
e sa
le b
ecau
se th
e lo
nger
a
tran
sact
ion
take
s, th
e m
ore
oppo
rtun
ity
ther
e is
for
valu
e er
osio
n.
Als
o he
lpfu
l is
to p
repa
re fo
r se
para
ting
the
oper
atio
ns o
f th
e un
it fr
om th
e pa
rent
com
pany
as
earl
y as
pos
sibl
e w
hen
deal
pre
para
tion
s be
gin.
Loo
king
out
for
the
unex
pect
ed,
incl
udin
g du
al-t
rack
tran
sact
ions
(sa
le o
r sp
in-o
ff),
als
o m
ay h
elp
mak
e de
als
succ
essf
ul..
Ask
ing
rele
van
t q
ues
tio
ns
up
fro
nt
Whe
n pl
anni
ng a
div
estit
ure,
an
orga
niza
tion
may
enh
ance
its
cha
nce
of a
succ
essf
ul tr
ansa
ctio
n by
ask
ing
and
answ
erin
g qu
estio
ns in
spe
cifi c
are
as:
• W
ho is
the
anti
cipa
ted
buye
r? P
ublic
or
priv
ate?
C
orpo
rate
? D
omes
tic
or fo
reig
n? M
anag
emen
t? A
fi n
anci
al b
uyer
?
• H
ow w
ill th
e tr
ansa
ctio
n te
am m
anag
ing
the
dive
stit
ure
be m
otiv
ated
or
rew
arde
d, a
long
wit
h th
e ex
ecut
ives
w
ho w
ill b
e le
avin
g th
e pa
rent
com
pany
to s
tart
w
orki
ng fo
r th
e ac
quir
er?
• H
ow c
ompl
ex is
the
anti
cipa
ted
dive
stit
ure
and
the
atte
ndan
t sep
arat
ion
of fi
nanc
ial s
yste
ms,
peo
ple,
and
op
erat
ions
?
• W
hat w
ill a
buy
er r
eque
st in
reg
ard
to d
ata
and
addi
tion
al in
form
atio
n?
• W
hat a
re th
e ri
sks,
and
has
a p
lan
been
dev
elop
ed to
re
duce
ris
ks a
nd s
urpr
ises
?
• W
hat a
re th
e an
tici
pate
d bu
yer’
s au
dit a
nd fi
nanc
ial
repo
rtin
g re
quir
emen
ts?
• H
ow w
ill th
e pr
oces
s be
man
aged
, and
wha
t is
the
tim
elin
e fo
r th
e tr
ansa
ctio
n?
• W
ho w
ill m
anag
e th
e pr
oces
s, a
nd d
oes
the
com
pany
ha
ve a
dequ
ate
inte
rnal
res
ourc
es/k
now
ledg
e?
• W
hat o
ngoi
ng tr
ansa
ctio
ns w
ith
the
dive
sted
ope
rati
ons
are
to b
e ex
pect
ed, a
nd h
ow w
ill th
ose
be h
andl
ed?6
• W
hat a
re th
e ta
x or
oth
er r
egul
ator
y re
quir
emen
ts th
at
coul
d re
sult
in p
oten
tial
add
itio
nal c
osts
or
rest
rict
ions
on
how
the
dive
stit
ure
is c
ompl
eted
?
Ca
rve-
ou
ts fr
equ
ent
am
on
g m
eta
ls c
om
pa
nie
s
Whe
n it
com
es to
div
esti
ture
s in
the
met
als
sect
or, c
arve
-ou
ts a
re fr
eque
nt, p
arti
cula
rly
in N
orth
Am
eric
a an
d W
este
rn E
urop
e. T
he fo
cus
is o
ften
on
prod
uct s
egm
ent
spin
-off
s.
Ther
e ar
e th
ree
leve
ls o
f car
ve-o
uts
mos
t fre
quen
t in
dive
stit
ures
of m
etal
s co
mpa
nies
, and
eac
h re
quir
es
6 “
Gen
erat
ing
Valu
e fr
om C
orp
orat
e D
ives
titur
es in
201
1,”
Pw
C, 2
011.
Fo
rgin
g a
hea
d
21
Spec
ialt
y ca
se s
tud
y:
Div
esti
ture
and
spi
n-of
f for
glo
bal c
ompa
ny
Issu
eA
glo
bal m
etal
s co
mpa
ny s
ough
t opp
ortu
niti
es to
div
est s
ever
al b
usin
ess
oper
atio
ns th
at w
ere
not c
entr
al to
its
core
mis
sion
. The
com
pany
urg
entl
y ne
eded
cas
h to
pay
a le
nder
loan
and
was
req
uire
d to
effi
cie
ntly
con
duct
a
seri
es o
f div
esti
ture
tran
sact
ions
.
Act
ion
PwC
per
form
ed s
ell-s
ide
due
dilig
ence
on
enti
ties
for
dive
stit
ure,
ana
lyzi
ng
earn
ings
tren
ds, w
orki
ng c
apit
al is
sues
, and
pot
enti
al s
epar
atio
n co
ncer
ns.
We
help
ed m
anag
emen
t gai
n an
acc
urat
e vi
ew o
f nor
mal
ized
ear
ning
s an
d w
orki
ng c
apit
al a
nd h
elpe
d pr
epar
e th
e co
mpa
ny fo
r bu
yer
dilig
ence
by
iden
tify
ing
area
s of
val
ue le
akag
e. P
wC
als
o he
lped
the
com
pany
est
ablis
h a
cent
ral d
ives
titu
re m
anag
emen
t offi
ce
and
achi
eve
its
goal
s fo
r th
e se
para
tion
, in
clud
ing
tran
siti
on s
ervi
ce a
gree
men
ts a
nd IT
and
peo
ple
appr
oach
es.
Impa
ctPw
C’s
invo
lvem
ent h
elpe
d th
e co
mpa
ny’s
man
agem
ent a
nd it
s ba
nker
s pr
epar
e fo
r th
e de
al n
egot
iati
ons.
Wit
h th
e fi r
st fe
w w
eeks
of P
wC
’s fi e
ld
depl
oym
ent,
the
com
pany
:
• Es
tabl
ishe
d it
s di
vest
itur
e m
anag
emen
t offi
ce
• D
evel
oped
ope
rati
onal
and
func
tion
al D
ay O
ne s
epar
atio
n pl
ans
• C
ondu
cted
sep
arat
ion
acti
viti
es w
ith
tran
siti
on te
ams
The
com
pany
suc
cess
fully
clo
sed
the
tran
sact
ions
by
the
debt
cal
l dat
e, r
aisi
ng
enou
gh c
ash
to r
estr
uctu
re it
s de
bt.
20
P
wC
Pw
C s
po
tlig
ht
In a
n un
cert
ain
glob
al e
cono
my,
liq
uidi
ty is
sues
and
sta
keho
lder
pr
essu
res
for
impr
oved
per
form
ance
ha
ve tu
rned
mor
e at
tent
ion
to
dive
stit
ure
acti
viti
es in
the
shor
t te
rm. D
ives
titu
re m
ay b
e in
evit
able
. B
ut a
sm
alle
r po
ol o
f lik
ely
buye
rs
and
grea
ter
scru
tiny
from
ban
ks h
ave
resu
lted
in m
ore
due
dilig
ence
am
ong
buye
rs, w
hich
oft
en e
xten
ds th
e sa
le p
roce
ss a
nd s
omet
imes
ero
des
sale
pri
ces.
For
the
selle
r, r
eady
ing
a co
mpa
ny
for
mor
e ri
goro
us b
uyer
due
dili
genc
e m
ay p
rese
rve
the
valu
e of
a d
ives
titu
re.
Als
o im
port
ant:
pre
para
tion
s fo
r m
itig
atin
g ot
her
area
s of
freq
uent
va
lue
loss
, inc
ludi
ng in
effe
ctiv
e te
rms
and
pric
ing
of tr
ansi
tion
ser
vice
s ag
reem
ents
and
insu
ffi c
ient
infr
a-st
ruct
ure
plan
ning
for
stra
nded
cos
ts.
Ho
w P
wC
ma
y h
elp
We’
ve s
een
mar
ket c
ondi
tion
s fl u
ctua
te
dram
atic
ally
in r
ecen
t yea
rs. S
till,
ex
trac
ting
top
valu
e re
mai
ns th
e ov
erri
ding
goa
l of a
div
esti
ture
. The
di
vest
itur
e pr
ofes
sion
als
wit
h Pw
C’s
Tran
sact
ion
Serv
ices
sup
port
clie
nts
in
acce
lera
ting
the
spee
d to
mar
ket/
clos
e an
d he
lp th
em r
eady
com
pani
es fo
r sa
le to
gai
n th
e m
ost v
alue
of t
he
busi
ness
in th
e of
feri
ng p
rice
. Our
di
vest
itur
e pr
ofes
sion
als,
par
t of a
Tr
ansa
ctio
n Se
rvic
es te
am o
f abo
ut
1,00
0 de
al p
rofe
ssio
nals
in 1
6 ci
ties
ac
ross
the
Uni
ted
Stat
es, m
ay a
ddre
ss
carv
e-ou
t fi n
anci
als,
sta
nd-a
lone
aud
it
requ
irem
ents
, ide
ntifi
cati
on o
f po
tent
ial b
uyer
dea
l iss
ues,
tran
siti
on
serv
ice
agre
emen
ts, d
ata
room
as
sist
ance
, and
str
uctu
ral a
lter
nati
ves
desi
gned
to h
elp
mai
ntai
n th
e va
lue
of
the
dive
stit
ure.
We
offe
r:
• D
ives
titur
e m
anag
emen
t sup
port
—Pw
C h
as p
ut to
geth
er a
win
ning
ap
proa
ch to
laun
chin
g an
d m
anag
ing
dive
stitu
res.
We
brin
g a
time-
test
ed d
ives
titur
e an
d se
para
tion
met
hodo
logy
and
an
expa
nsiv
e se
t of p
roce
sses
, too
ls,
tem
plat
es, a
nd g
uide
s to
sup
port
th
e ov
eral
l div
estit
ure.
• Fu
ncti
onal
div
esti
ture
ass
ista
nce—
PwC
is e
quip
ped
wit
h co
re
com
pete
ncie
s in
the
fund
amen
tal
infr
astr
uctu
re a
reas
that
form
the
build
ing
bloc
ks fo
r ca
ptur
ing
and
pres
ervi
ng v
alue
in a
div
esti
ture
. O
ur e
xper
ienc
ed d
ives
titu
re
prof
essi
onal
s dr
aw o
n th
eir
subj
ect
mat
ter
and
proc
ess
know
ledg
e to
he
lp c
lient
s po
siti
on a
bus
ines
s fo
r sa
le a
nd o
ptim
ize
over
all r
esul
ts
from
tran
siti
on to
tran
sfor
mat
ion.
PwC
hel
ps c
lient
s pr
epar
e fo
r ri
goro
us
buye
r du
e di
ligen
ce. W
e m
ay d
eliv
er
supp
ort,
met
hodo
logy
, too
ls, a
nd
tem
plat
es th
at ta
ke y
ou fr
om s
tart
to
fi nis
h of
a d
ives
titu
re a
nd c
onsi
der:
• D
ives
titu
re s
trat
egy
• C
andi
date
acq
uire
r sc
reen
ing
• Se
ll-si
de c
omm
erci
al d
ue d
ilige
nce
• Se
ll-si
de fi
nanc
ial d
ue d
ilige
nce
• Fi
nanc
ial a
nd ta
x st
ruct
urin
g
• Fi
nanc
ial s
tate
men
ts a
nd r
epor
ting
• C
arve
-out
sta
tem
ents
and
fi lin
gs
for
regu
lato
ry c
ompl
ianc
e
• Pe
ople
and
HR
mat
ters
incl
udin
g em
ploy
ee b
enefi
ts
• O
pera
tion
al c
arve
-out
ana
lysi
s
• In
sura
nce
risk
• C
ontr
act t
rans
itio
n
• D
ives
titu
re m
anag
emen
t an
d se
para
tion
PwC
dep
loys
a te
am ta
ilore
d to
eac
h cl
ient
’s en
gage
men
t. In
add
itio
n to
su
ppor
ting
a s
peed
y, m
ore
effi c
ient
go
-to-
mar
ket p
roce
ss a
nd c
lose
, ri
goro
us d
ives
titu
re m
anag
emen
t and
du
e di
ligen
ce h
elp
clie
nts:
• Ex
ecut
e a
smoo
th tr
ansa
ctio
n,
clos
e, a
nd p
ost-
clos
e tr
ansi
tion
• R
educ
e ri
sks,
avo
id c
ostl
y su
rpri
ses,
and
enh
ance
ove
rall
cont
rol o
f the
pro
cess
• A
ddre
ss o
pera
tion
sep
arat
ion
issu
es e
arly
, inc
ludi
ng tr
ansi
tion
se
rvic
es a
gree
men
ts a
nd p
oten
tial
st
rand
ed c
osts
• Av
oid
valu
e de
teri
orat
ion
thro
ugho
ut th
e pr
oces
s an
d af
ter
the
clos
e
• R
educ
e di
srup
tion
s to
bot
h th
e ta
rget
and
rem
aini
ng b
usin
esse
s
• M
itig
ate
regu
lato
ry, fi
nan
cial
re
port
ing,
and
ope
rati
onal
ris
ks
• Se
ek tr
ansa
ctio
n va
lue
for t
he s
elle
r
Our
tailo
red
appr
oach
giv
es
clie
nts
the
appr
opri
ate
bala
nce
of
tran
sact
ion,
func
tion
al, a
nd in
dust
ry
expe
rien
ce a
cros
s th
e va
lue
chai
n.
We
star
t wit
h a
clie
nt’s
tran
sact
ion
view
poin
t and
inve
stm
ent t
hesi
s.
The
n w
e gu
ide
the
com
pany
thro
ugh
asse
ssm
ents
and
eva
luat
ions
of
dive
stit
ure
cons
ider
atio
ns e
xclu
sive
or
auc
tion
sit
uati
on p
lann
ed c
apit
al
stru
ctur
e an
d fi n
anci
ng s
ourc
es
tim
ing
and
deliv
erab
les
cri
tica
l dea
l an
d va
luat
ion
issu
es a
nd in
tegr
atio
n ch
alle
nges
and
sol
utio
ns.
Fo
rgin
g a
hea
d
5
invo
lvem
ent w
ith
diff
eren
t dea
l dyn
amic
s an
d m
ulti
ple
com
plex
itie
s.
Wit
h a
corp
orat
e-le
vel c
arve
-out
, ope
rati
ons
typi
cally
ha
ndle
d at
the
corp
orat
e le
vel a
re n
ot in
clud
ed in
the
dive
stit
ure.
So
nego
tiat
ions
focu
s on
suc
h ar
eas
as th
e le
gal,
acco
unti
ng/fi
nan
ce, t
axat
ion,
trea
sury
, IT,
sup
ply
chai
n,
and
insu
ranc
e de
part
men
ts. T
ypic
ally
, a tr
ansi
tion
ser
vice
s ag
reem
ent (
TSA
) w
ill c
over
six
to 1
2 m
onth
s (o
r lo
nger
),
unti
l the
new
lead
ersh
ip o
f the
uni
t bei
ng d
ives
ted
can
deve
lop
or in
tegr
ate
the
corp
orat
e se
rvic
es.
In th
e ca
se o
f a p
lant
-lev
el c
arve
-out
, whi
ch is
com
mon
in
the
met
als
indu
stry
, eve
ry d
ives
titu
re m
ay r
esul
t in
the
divi
sion
of a
pla
nt. T
he s
elle
r ty
pica
lly w
ill k
eep
the
half
of
the
plan
t vie
wed
as
core
to it
s m
issi
on, w
ith
the
othe
r ha
lf
of th
e pl
ant t
rans
ferr
ed to
the
unit
bei
ng d
ives
ted.
As
a re
sult
, a s
erie
s of
com
plex
ow
ners
hip
issu
es a
rise
for
reso
luti
on. F
or e
xam
ple,
will
the
plan
t mai
nten
ance
gro
up,
esse
ntia
l to
ongo
ing
profi
tab
le o
pera
tion
s, b
e sp
lit, o
r w
ill
one
part
y in
the
tran
sact
ion
own
the
grou
p an
d re
nt
mai
nten
ance
ser
vice
s to
the
othe
r pa
rty?
Oth
er p
lant
issu
es a
lso
have
the
pote
ntia
l for
sig
nifi c
ant
oper
atio
nal a
nd c
ost c
onse
quen
ces,
incl
udin
g qu
esti
ons
rega
rdin
g ow
ners
hip
and
cont
rol o
f:
• St
eam
sup
ply
• C
o-ge
nera
tion
pla
nts
• M
eter
s
• Su
pplie
rs
• R
ail l
ines
• Pu
mps
and
oth
er e
quip
men
t
Del
inea
ting
ow
ners
hip
issu
es ty
pica
lly r
equi
res
an e
xten
sive
w
alk-
thro
ugh
and
insp
ecti
on o
f the
pla
nt s
ite.
Oft
en th
e re
sult
is p
erm
anen
t ser
vice
agr
eem
ents
rob
ust e
noug
h to
w
eath
er p
lant
exp
ansi
on, i
nfl a
tion
, and
oth
er o
ngoi
ng
conc
erns
and
out
com
es th
at c
anno
t be
enti
rely
pre
dict
ed
befo
re c
ompl
etio
n of
the
deal
.
Wit
h su
pply
cha
in c
arve
-out
s, d
eal n
egot
iati
ons
may
ce
nter
on
ever
ythi
ng o
utsi
de th
e pl
ant t
hat r
emai
ns
oper
atio
nal—
incl
udin
g, fo
r ex
ampl
e, a
com
mon
sup
ply
cont
ract
for
a pa
rtic
ular
raw
mat
eria
l. W
hile
the
buye
r of
th
e di
vest
ed u
nit m
ay r
equi
re th
at r
aw m
ater
ial,
its
need
s m
ay n
ot b
e su
bsta
ntia
l eno
ugh
to tr
igge
r th
e vo
lum
e di
scou
nts
enjo
yed
by th
e se
lling
com
pany
. As
a re
sult
, de
al v
alua
tion
may
be
affe
cted
.
Ther
e ar
e al
so c
once
rns
arou
nd s
hare
d di
stri
buto
rs. F
or
exam
ple,
if a
met
als
com
pany
shi
ps p
rodu
cts
to A
sia,
the
orga
niza
tion
’s A
sian
dis
trib
utor
may
be
hand
ling
mul
tipl
e pr
oduc
ts s
old
by th
e ta
rget
com
pany
’s pa
rent
or
subs
idia
ries
th
at a
re n
ot in
clud
ed in
the
tran
sact
ion.
Whe
n a
unit
is
dive
sted
, the
buy
er m
ay w
ant t
o es
tabl
ish
a ne
w, s
epar
ate
rela
tion
ship
wit
h th
e di
stri
buto
r. A
lter
nati
vely
, the
sel
ler
and
buye
r m
ay c
reat
e a
TSA
or
cont
inue
to b
oth
use
the
dist
ribu
tor
unti
l eac
h en
gage
s it
s ow
n di
stri
buto
r.
A s
elle
r lo
okin
g fo
r su
cces
s in
any
giv
en d
ives
titu
re o
r sp
in-o
ff w
ill p
repa
re o
n a
num
ber
of fr
onts
:
Rep
osit
ioni
ng to
sei
ze o
ppor
tuni
ties
By
empl
oyin
g a
wel
l-defi
ned
and
reg
ular
por
tfol
io p
roce
ss, a
co
mpa
ny m
ay a
chie
ve b
ette
r op
port
unit
ies
from
its
busi
ness
an
d pr
oduc
t por
tfol
io. F
orw
ard-
thin
king
com
pani
es id
enti
fy
appr
opri
ate
dive
stit
ure
cand
idat
es b
ased
on fi n
anci
al,
oper
atin
g, a
nd c
omm
erci
al p
aram
eter
s. S
uch
fact
ors
incl
ude
a bu
sine
ss m
atur
ing
or b
ecom
ing
ripe
for
sale
bec
ause
of
rest
ruct
urin
g or
mar
ket f
acto
rs; a
n ac
quir
ing
busi
ness
re
quir
ing
a ca
pita
l inf
usio
n or
spe
cial
ized
kno
wle
dge
that
re
side
s in
the
port
folio
com
pany
or
com
pany
’s m
anag
emen
t;
or a
bus
ines
s be
ing
part
of a
larg
er a
cqui
siti
on a
nd n
ot
fi tti
ng w
ith
the
over
all s
trat
egic
pla
n of
the
acqu
irin
g co
mpa
ny o
r it
s po
rtfo
lio b
usin
esse
s.
Aft
er s
ettl
ing
on a
bus
ines
s to
exi
t, th
e co
mpa
ny b
egin
s th
e pr
oces
s in
ear
nest
by
valid
atin
g th
e ca
se fo
r se
para
tion
. The
pr
oces
s m
ay e
ncom
pass
res
olvi
ng s
uch
issu
es a
s:
• W
hat t
ype
of e
xit s
uits
my
inve
stor
s? Is
it r
ealis
tic?
• W
hich
buy
ers
in w
hich
mar
kets
are
mor
e lik
ely
to b
e w
illin
g an
d ab
le to
pay
full
pric
e?
6
Pw
C
• W
ould
a s
trat
egic
par
tner
add
val
ue?
If s
o, w
hich
ca
ndid
ates
are
sui
tabl
e fo
r th
e bu
sine
ss w
e w
ill d
ives
t?
• W
hat s
cope
of d
ilige
nce
on p
rosp
ecti
ve b
uyer
s or
pa
rtne
rs is
app
ropr
iate
from
the fi n
anci
al a
nd
com
mer
cial
per
spec
tive
s?
• W
hich
dea
l str
uctu
res
stri
ke a
bal
ance
bet
wee
n th
e bu
yer’
s an
d se
ller’
s ne
eds?
Eval
uati
ng o
pera
tion
s fo
r po
ssib
le c
orre
ctio
n
In to
day’
s en
viro
nmen
t, c
once
rns
that
buy
ers
mig
ht h
ave
over
look
ed in
pre
viou
s ye
ars
may
dam
age
or e
ven
dera
il a
deal
. To
prep
are
for
a di
vest
itur
e, s
elle
rs c
ondu
ct
an a
sses
smen
t of o
pera
tion
s an
d id
enti
fy a
nd c
orre
ct
sign
ifi ca
nt is
sues
, suc
h as
unu
sual
ly h
igh
back
-offi
ce
cost
s an
d pl
ant i
neffi
cie
ncy,
and
res
truc
ture
thei
r op
tion
s be
fore
go
ing
to m
arke
t. E
ven
if s
elle
rs c
anno
t cor
rect
issu
es p
rior
to
clo
sing
, buy
ers
are
keen
to g
ain
an u
nder
stan
ding
of t
he
targ
et’s
cost
s an
d be
nefi t
s.
Wal
king
in th
e bu
yer’
s sh
oes
Ado
pt a
buy
er’s
pers
pect
ive
by p
erfo
rmin
g du
e di
ligen
ce o
f th
e bu
sine
ss b
efor
e in
volv
ing
pote
ntia
l buy
ers.
A th
orou
gh
revi
ew o
f the
uni
t sla
ted
for
sale
may
be
esse
ntia
l whe
n th
e se
ller’
s an
d bu
yer’
s pr
icin
g ex
pect
atio
ns v
ary
sign
ifi ca
ntly
. A
dvan
ce d
ilige
nce
may
als
o he
lp th
e se
ller
iden
tify
and
pr
omot
e th
e un
it’s
stre
ngth
s an
d ev
alua
te a
lter
nati
ve
tran
sact
ions
and
str
uctu
res
from
an
info
rmed
per
spec
tive
.
Buy
ers
ofte
n ar
e su
spic
ious
that
exe
cuti
ng a
div
esti
ture
is
mer
ely
a st
rate
gy fo
r a
com
pany
to r
id it
self
of a
pro
blem
as
set.
To
defu
se th
at is
sue,
sel
lers
sho
uld
be e
quip
ped
to
answ
er c
riti
cal q
uest
ions
:
• W
hy is
the
asse
t for
sal
e?
• W
hy h
as it
bee
n un
derp
erfo
rmin
g?
• W
hy is
it e
xpec
ted
to d
o w
ell o
utsi
de th
e co
mpa
ny?
• H
ow w
ill th
e fo
reca
st b
e pr
epar
ed?
Det
erm
inin
g se
para
tion
issu
es e
arly
dur
ing
the
proc
ess
Hum
an r
esou
rces
, int
elle
ctua
l pro
pert
y, in
form
atio
n te
chno
logy
sys
tem
s, e
mpl
oyee
ben
efi t
pla
ns, a
nd o
ther
sy
stem
s an
d pr
oces
ses
that
took
yea
rs to
cre
ate
may
be
dise
ntan
gled
dur
ing
a di
vest
itur
e. T
he p
roce
ss in
clud
es th
e de
velo
pmen
t of T
SAs,
whi
ch p
rovi
de fo
r se
rvic
es
betw
een
the
selle
r an
d th
e bu
yer
afte
r cl
osin
g. B
uyer
s w
ill
wan
t not
onl
y to
out
line
the
issu
es a
nd ti
mel
ines
invo
lved
, bu
t als
o to
inco
rpor
ate
TSA
and
pos
t-T
SA c
osts
into
thei
r in
itia
l val
uati
ons.
Pres
enti
ng th
e bu
sine
ss in
a m
ore
favo
rabl
e lig
ht
His
tori
cal fi
nan
cial
res
ults
oft
en m
ay b
e re
vise
d to
ac
cura
tely
refl
ect
the
unit
as
a st
and-
alon
e op
erat
ion
and
excl
usiv
e of
non
recu
rrin
g it
ems.
A b
usin
ess
plan
may
cle
arly
an
d co
nvin
cing
ly d
escr
ibe
the
resu
lts
to li
nk th
e fo
reca
sts
and
acti
ons
and
driv
e pr
ofi t
s.
For
the
mos
t cha
lleng
ing
dive
stit
ures
to b
e su
cces
sful
, the
ve
ndor
may
dev
elop
a d
etai
led
busi
ness
pla
n to
pre
sent
to
pro
spec
tive
pur
chas
ers.
The
pla
n co
uld
incl
ude
a de
taile
d an
alys
is o
f the
rec
urri
ng h
isto
rica
l fi g
ures
and
m
ove
to d
escr
ibe
the
fore
cast
s an
d ac
tion
s to
con
side
r fo
r im
plem
enta
tion
. A v
endo
r m
ay m
ake
a di
vest
itur
e m
ore
attr
acti
ve to
pot
enti
al p
urch
aser
s by
usi
ng s
trat
egie
s su
ch
as p
rovi
ding
them
wit
h co
ntra
cts
for
a pr
edet
erm
ined
ti
me.
Suc
h in
cent
ives
cou
ld b
e co
nsid
ered
whe
n pr
epar
ing
the
busi
ness
pla
n.
Selle
rs a
lso
coul
d co
nsid
er th
e va
riou
s ta
x an
d ac
coun
ting
st
ruct
ures
ava
ilabl
e to
them
and
cho
ose
the
one
that
wor
ks
from
a d
eal p
ersp
ecti
ve.
Fo
rgin
g a
hea
d
19
Dea
ls b
y ta
rget
met
al c
ateg
ory
—20
11M
easu
red
by
valu
e of
dea
ls w
orth
$50
mill
ion
or m
ore
Dea
ls b
y ta
rget
met
al c
ateg
ory
—4Q
11M
easu
red
by
valu
e of
dea
ls w
orth
$50
mill
ion
or m
ore
0%10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
With
dra
wn
Pen
din
g or
inte
nded
Com
ple
ted
Tota
l
8.4
Alu
min
um
Ste
elIro
n or
e
Oth
er
% of deal value (absolute deal valuein data labels in $ millions)
2.3
1.6
0.2
0.5
1.5
2.3
7.9
0.8
0.8
0%10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
With
dra
wn
Pen
din
g or
inte
nded
Com
ple
ted
Tota
l
31.8
4.1
% of deal value (absolute deal valuein data labels in $ millions)
13.1
6.1
3.3
6.5
1.3
7.4
6.0
4.8
0.8
0.6
0.1
23.3
1.1
Alu
min
um
Ste
elIro
n or
e
Oth
er
Stee
l co
nti
nu
es t
o d
rive
va
lue
of m
eta
ls M
&A
PwC
seg
men
ts th
e m
etal
s se
ctor
into
four
cat
egor
ies
by
com
pari
ng s
tand
ard
indu
stri
al c
lass
ifi ca
tion
(SI
C)
code
s to
ou
r in
tern
al c
lass
ifi ca
tion
sys
tem
. Bas
ed o
n th
is p
roce
ss, w
e gr
oup
deal
s (m
easu
red
by n
umbe
r) in
to fo
ur p
rodu
ct
segm
ents
:
• St
eel
• A
lum
inum
• Ir
on o
re
• O
ther
Bas
ed o
n th
is m
etho
dolo
gy, s
teel
man
ufac
turi
ng ta
rget
s dr
ove
mos
t of t
he fo
urth
-qua
rter
act
ivit
y, c
ontr
ibut
ing
alm
ost t
wo-
thir
ds o
f the
dea
l val
ue. F
or 2
011
over
all,
stee
l w
as a
lso
the
key
driv
er w
ith
57.6
% o
f val
ue.
Stee
lmak
ers
wer
e re
spon
sibl
e fo
r the
thre
e m
ega-
deal
s va
lued
at $
7.36
bill
ion.
The
em
phas
is o
n st
eel m
anuf
actu
ring
m
akes
sen
se: s
teel
is a
mor
e fr
agm
ente
d pa
rt o
f the
met
als
sect
or a
nd s
o is
like
ly to
see
mor
e co
nsol
idat
ion,
cre
atin
g ec
onom
ies
of s
cale
for m
arke
t exp
ansi
on a
nd c
ost c
uttin
g.
18
P
wC
Acq
uire
rs f
rom
ad
vanc
ed v
ersu
s em
erg
ing
and
d
evel
op
ing
eco
nom
ies
Mea
sure
d b
y va
lue
of d
eals
wor
th $
50 m
illio
n or
mor
e
Acq
uir
ers
from
em
ergi
ng
econ
omie
s cr
eate
gr
eate
st p
erce
nta
ge o
f fou
rth
-qu
art
er a
ctiv
ity
In th
e fo
urth
qua
rter
, acq
uire
rs fr
om e
mer
ging
and
de
velo
ping
eco
nom
ies
once
aga
in d
rove
the
maj
orit
y of
de
als
valu
ed a
t $50
mill
ion
or m
ore,
wit
h 53
.6%
. Thi
s fo
llow
s si
mila
r re
sult
s in
the
thir
d qu
arte
r, w
hen
emer
ging
an
d de
velo
ping
nat
ions
wer
e re
spon
sibl
e fo
r 52
.2%
of d
eals
.
How
ever
, on
an a
nnua
l bas
is, e
mer
ging
and
dev
elop
ing
econ
omie
s de
crea
sed
thei
r pr
opor
tion
of d
eals
slig
htly
, fro
m
48.1
% in
201
0 to
47.
5% in
201
1.
0%20%
40%
60%
80%
100%
4Q11
2011
2010
48.1
%47
.5%
53.6
%
52.5
%46
.4%
51.9
%
Em
ergi
ng a
nd d
evel
opin
g
Ad
vanc
ed
Fo
rgin
g a
hea
d
7
Mov
ing
quic
kly
to r
educ
e va
lue
dete
rior
atio
n
Div
esti
ture
tran
sact
ions
, as
wit
h ac
quis
itio
ns, m
ay in
volv
e le
ngth
y pr
oces
ses.
Dep
endi
ng o
n w
heth
er a
car
ve-o
ut a
udit
w
as r
equi
red
and
othe
r bu
yer fi
nan
cing
and
reg
ulat
ory
requ
irem
ents
, a d
ives
titu
re ty
pica
lly m
ay ta
ke s
ix m
onth
s to
a
year
, acc
ordi
ng to
a g
roup
of c
orpo
rate
dev
elop
men
t ex
ecut
ives
sur
veye
d by
Pw
C. T
he lo
ng tr
ansa
ctio
n pe
riod
m
ay b
e dr
iven
by
the
com
plex
itie
s of
dev
elop
ing
an a
ccur
ate
fi nan
cial
und
erst
andi
ng o
f the
bus
ines
s un
it o
r ca
rve-
out
and
dise
ntan
glin
g it
s em
ploy
ees
and
oper
atio
ns fr
om th
e la
rger
cor
pora
te p
aren
t. T
he la
tter
pro
cess
may
last
an
addi
tion
al s
ix m
onth
s an
d ti
e up
res
ourc
es lo
ng a
fter
the
tran
sact
ion
clos
es.
A lo
ng, c
auti
ous
prep
arat
ion
peri
od m
ay b
e cr
itic
al to
a
succ
essf
ul s
ell t
rans
acti
on. T
he jo
urne
y to
get
ting
the
asse
t m
arke
ted
and
ulti
mat
ely
off t
he c
ompa
ny’s
bala
nce
shee
t be
gins
onc
e a
busi
ness
uni
t is
chos
en fo
r di
vest
itur
e. E
ven
thou
gh p
lann
ing
may
ext
end
the
tim
e sp
ent o
n a
dive
stit
ure,
it
may
sav
e ti
me
and
cost
s ov
eral
l bec
ause
the
proc
ess
is
likel
y to
be
mor
e effi c
ient
onc
e th
e se
ller
goes
to m
arke
t.
Avoi
ding
pit
falls
Bus
ines
s de
velo
pmen
t exe
cuti
ves
rece
ntly
sur
veye
d by
Pw
C a
gree
d on
nin
e co
mm
on p
itfa
lls in
a d
ives
titu
re.
Am
ong
the
area
s th
at m
ay d
amag
e or
der
ail a
dea
l:
• Fa
iling
to u
nder
stan
d yo
ur a
ntic
ipat
ed b
uyer
profi l
e
• Fa
iling
to a
ddre
ss c
riti
cal p
ensi
on is
sues
8 ib
id.
• Fa
iling
to a
ddre
ss c
riti
cal fi
nan
cial
rep
orti
ng is
sues
• La
ck o
f det
aile
d, c
redi
ble
supp
ort f
or th
e bu
sine
ss p
lan
• D
ata
reco
ncili
atio
n is
sues
whi
le g
oing
to m
arke
t bef
ore
vett
ing
the
num
bers
, req
uiri
ng s
ignifi c
ant b
ridg
ing
from
th
e co
nfi d
enti
al in
form
atio
n m
emor
andu
m, o
r C
IM, t
o th
e da
ta r
oom
info
rmat
ion
• St
rand
ed c
ost i
dent
ifi ca
tion
• La
ck o
f ris
k id
entifi c
atio
n an
d re
spon
se
• La
ck o
f a c
lear
tran
siti
on s
ervi
ces
plan
as
wel
l as
a vi
sion
fo
r po
st-T
SA p
erio
d
• Le
ngth
y di
vest
itur
e pr
oces
s re
sult
ing
from
lack
of
stru
ctur
e or
dat
a pr
epar
edne
ss8
The
crit
ical
fact
or s
hare
d by
com
pani
es th
at a
chie
ve th
eir
goal
s fo
r su
cces
sful
div
esti
ture
s an
d sp
in-o
ffs:
ext
ensi
ve
prep
arat
ion.
Unp
repa
redn
ess
may
be
cost
ly. S
elle
rs in
som
e in
dust
ries
that
wer
e st
artl
ed b
y th
e sp
eed
and
scop
e of
the
econ
omic
cri
sis
disc
over
ed th
ey h
ad li
ttle
bar
gain
ing
pow
er
agai
nst b
uyer
s th
at c
ould
che
rry-
pick
att
ract
ive
asse
ts a
nd
oper
atio
ns.
In m
any
case
s, n
egot
iati
ons
mov
ed to
o qu
ickl
y to
let s
elle
rs
effe
ctiv
ely
argu
e th
e va
lue
of th
eir
asse
ts, a
nd h
avin
g pr
epar
ed to
o la
te, t
hey
had
no a
lter
nati
ve e
xcep
t to
take
w
hat t
hey
wer
e of
fere
d or
scr
ambl
e to
sur
vive
dur
ing
an
exte
nded
pro
cess
. Pre
pari
ng e
arly
and
eff
ecti
vely
pre
pare
s se
llers
to a
ct w
hen
nece
ssar
y an
d re
tain
neg
otia
ting
pow
er,
so th
ey m
ay r
ealiz
e m
ore
valu
e fr
om th
eir
dive
stit
ure.
8
Pw
C
Key
ta
x co
nsi
der
ati
on
s
Tax
cons
eque
nces
in e
very
app
licab
le c
ount
ry s
houl
d be
exp
lore
d fo
r a
dive
stit
ure.
The
se c
onsi
dera
tion
s va
ry a
nd m
ay b
e re
view
ed.
The
spec
ifi c
disc
ussi
on o
f tax
es in
this
rep
ort r
elat
es to
the
Uni
ted
Stat
es o
nly.
Ther
e ar
e nu
mer
ous
way
s to
str
uctu
re a
pro
pose
d di
vest
itur
e, b
ut c
onsi
deri
ng ta
x effi c
ienc
ies
in a
dvan
ce m
ay h
elp
incr
ease
sh
areh
olde
r va
lue.
For
exa
mpl
e, if
a d
ives
titu
re is
trea
ted
as a
div
iden
d to
the
shar
ehol
ders
, the
res
ult c
ould
be
taxa
ble
inco
me
to th
e in
divi
dual
sha
reho
lder
s. S
imila
rly,
the
sale
of a
bus
ines
s to
a th
ird
part
y m
ay r
esul
t in
capi
tal g
ain
to th
e se
ller.
How
ever
, the
US
Inte
rnal
Rev
enue
Cod
e pr
ovid
es s
ever
al m
echa
nism
s th
at le
t tax
paye
rs s
truc
ture
cer
tain
cor
pora
te
dive
stit
ures
as
tax-
free
reo
rgan
izat
ions
and
/or
dist
ribu
tion
s. In
par
ticu
lar,
the
use
of s
pin-
offs
, spl
it-o
ffs,
and
spl
it-u
ps m
ay
allo
w fo
r th
e di
stri
buti
on o
f sto
ck o
f one
or
mor
e co
rpor
atio
ns to
sha
reho
lder
s or
oth
er s
ecur
ity
hold
ers
wit
hout
the
reco
gnit
ion
of g
ain
or lo
ss. T
he r
ules
gov
erni
ng th
ese
type
s of
tran
sact
ions
are
hig
hly
tech
nica
l, an
d to
qua
lify,
a ta
xpay
er
face
s ce
rtai
n re
quir
emen
ts. S
ome
of th
ese
incl
ude:
• A
ctiv
e tr
ade
or b
usi
nes
s—Ei
ther
the
dist
ribu
ted
corp
orat
ion
or th
e di
stri
buti
ng c
orpo
rati
on (
or, i
n so
me
case
s, a
n affi l
iate
) m
ust h
ave
cond
ucte
d th
is
acti
ve tr
ade
or b
usin
ess
for fi v
e y
ears
pri
or to
the
dist
ribu
tion
. Fur
ther
mor
e, b
oth
the
dist
ribu
ting
and
di
stri
bute
d co
rpor
atio
ns m
ust b
e en
gage
d in
the
acti
ve
cond
uct o
f a tr
ade
or b
usin
ess
imm
edia
tely
aft
er th
e di
stri
buti
on. T
his
also
mea
ns th
at b
oth
busi
ness
es
mus
t be
able
to d
emon
stra
te th
at th
ey a
re v
iabl
e st
and-
alon
e bu
sine
sses
pos
t-sp
lit.
• B
usi
nes
s pu
rpos
e—T
he tr
ansa
ctio
n is
req
uire
d to
be
car
ried
out
for
one
or m
ore
corp
orat
e bu
sine
ss
purp
oses
. The
pri
ncip
al b
usin
ess
purp
ose
cann
ot b
e to
pro
vide
non
reco
gnit
ion
trea
tmen
t of a
ny g
ains
or
loss
es o
n th
e tr
ansa
ctio
n. D
epen
ding
on
the
fact
s an
d ci
rcum
stan
ces,
acc
epta
ble
busi
ness
pur
pose
s m
ay
incl
ude
prov
idin
g an
equ
ity
inte
rest
to c
erta
in
empl
oyee
s, fa
cilit
atin
g fi n
anci
ng tr
ansa
ctio
ns (
stoc
k of
feri
ng o
r de
bt b
orro
win
g), s
avin
g co
sts,
res
olvi
ng
com
peti
tion
pro
blem
s w
ith
cust
omer
s or
sup
plie
rs,
or a
pply
ing
“fi t
and
focu
s” (
reso
lvin
g m
anag
emen
t or
oth
er is
sues
res
ulti
ng fr
om o
pera
ting
mul
tipl
e bu
sine
sses
in o
ne c
orpo
rati
on/g
roup
of c
orpo
rati
ons)
.
• D
istr
ibu
tion
of c
ontr
ol—
Whe
n th
e di
stri
buti
on is
m
ade,
the
dist
ribu
ting
cor
pora
tion
mus
t dis
trib
ute
“con
trol
” (u
sual
ly d
efi n
ed a
s 80
% o
f the
vot
ing
pow
er
and
shar
es).
• D
evic
e te
st—
Sim
ilar
to th
e bu
sine
ss p
urpo
se a
naly
sis
abov
e, th
e tr
ansa
ctio
n ca
nnot
be
used
pri
ncip
ally
as
a “d
evic
e” to
dis
trib
ute
the
earn
ings
and
profi t
s of
a
corp
orat
ion
so a
s no
t to
garn
er d
ivid
end
trea
tmen
t. T
he
US
tax
auth
orit
ies
cons
ider
the
fact
s an
d ci
rcum
stan
ces
surr
ound
ing
the
tran
sact
ion
to d
eter
min
e w
heth
er th
is
test
is m
et, b
ut a
str
ong,
non
tax
corp
orat
e bu
sine
ss
purp
ose
wit
hout
a p
rear
rang
ed p
lan
or in
tent
ion
by th
e di
stri
bute
es to
sel
l to
stoc
k po
st-s
pin
gen
eral
ly is
a
favo
rabl
e fa
ctor
in th
is a
naly
sis.
Man
y ad
diti
onal
fede
ral,
stat
e, a
nd fo
reig
n re
gula
tory
and
ta
x re
quir
emen
ts a
pply
and
cou
ld b
e an
alyz
ed p
rior
to
unde
rtak
ing
a co
rpor
ate
spin
-off
. Non
ethe
less
, any
co
rpor
atio
n pl
anni
ng to
dis
pose
of a
bus
ines
s lin
e co
uld
cons
ider
whe
ther
a ta
x-fr
ee a
lter
nati
ve is
ava
ilabl
e.
Fo
rgin
g a
hea
d
17
Reg
iona
l dis
trib
utio
n o
f d
eals
by
targ
et r
egio
n*M
easu
red
by
num
ber
of d
eals
wor
th $
50 m
illio
n or
mor
e (4
Q11
)R
egio
nal d
istr
ibut
ion
of
dea
ls b
y ta
rget
reg
ion*
Mea
sure
d b
y va
lue
of d
eals
wor
th $
50 m
illio
n or
mor
e (4
Q11
)
Reg
iona
l dis
trib
utio
n o
f d
eals
by
acq
uire
r re
gio
nM
easu
red
by
num
ber
of d
eals
wor
th $
50 m
illio
n or
mor
e (4
Q11
)R
egio
nal d
istr
ibut
ion
of
dea
ls b
y ac
qui
rer
reg
ion
Mea
sure
d b
y va
lue
of d
eals
wor
th $
50 m
illio
n or
mor
e (4
Q11
)
Eur
ope
ex-U
K &
Eur
ozon
eA
fric
a/U
ndis
clos
edU
K &
Eur
ozon
eS
outh
Am
eric
aN
orth
Am
eric
aA
sia
& O
cean
ia
64.3
%
3.6%
3.6%
7.1%
20.7
%
19.8
%
24.7
%
0.9%
1.0%
53.7
%
3.6%
10.7
%
17.9
%
60.7
%
7.1%
48.3
%
28.1
%
5.0%
0.9%
17.7
%
16
P
wC
Glo
bal
met
als
M&
A a
ctiv
ity
Mea
sure
d b
y nu
mb
er a
nd v
alue
of d
eals
wor
th $
50 m
illio
n or
mor
e (2
011)
Nor
th A
mer
ica
Loca
l—10
dea
ls, $
8.4
billi
onIn
boun
d—8
deal
s, $
1.2
billi
onO
utbo
und—
6 de
als,
$1.
9 bi
llion
Euro
peLo
cal—
12 d
eals
, $3.
4 bi
llion
Inbo
und—
8 de
als,
$2.
0 bi
llion
Out
boun
d—5
deal
s, $
2.8
billi
on
Asi
a &
Oce
ania
Loca
l—60
dea
ls, $
26.3
bill
ion
Inbo
und—
13 d
eals
, $7.
9 bi
llion
Out
boun
d—13
dea
ls, $
2.7
billi
onA
fric
a/un
disc
lose
dLo
cal—
2 de
als,
$0.
5 bi
llion
Inbo
und—
3 de
als,
$0.
4 bi
llion
Out
boun
d—5
deal
s, $
0.6
billi
on
Sout
h A
mer
ica
Loca
l—5
deal
s, $
4.6
billi
onO
utbo
und—
1 de
al, $
0.4
billi
onO
utbo
und—
4 de
als,
$4.
0 bi
llion
Asi
a a
nd
Oce
an
ia d
eals
dri
ve lo
cal d
eal v
olu
me
The
Asi
a an
d O
cean
ia re
gion
saw
the
high
est o
vera
ll de
al v
alue
in 2
011,
wit
h 86
inbo
und,
out
boun
d, a
nd lo
cal d
eals
val
ued
at
a co
mbi
ned
$36.
9 bi
llion
. Am
ong
loca
l dea
ls, A
sia
and
Oce
ania
com
pani
es le
ad th
e w
ay, s
trik
ing
60 d
eals
wit
h a
com
bine
d va
lue
of $
26.3
bill
ion
of th
e w
orld
wid
e to
tal o
f $51
.5 b
illio
n. A
sia
and
Oce
ania
is e
xpec
ted
to c
ontin
ue to
dri
ve lo
cal d
eal
valu
e th
roug
h 20
12.
It is
not
a s
urpr
ise
that
Chi
na-b
ased
dea
ls w
ere
the
prim
ary
driv
er o
f act
ivity
in A
sia
and
Oce
ania
(29
dea
ls in
201
1) g
iven
the
emph
asis
that
the
Chi
nese
gov
ernm
ent h
as p
ut o
n st
eel c
ompa
ny c
onso
lidat
ion
in it
s m
ost r
ecen
t Fiv
e Ye
ar P
lan.
Aus
tral
ia a
lso
saw
hig
h ac
tivity
in 2
011
(18
deal
s), w
hich
indi
cate
s th
at c
ount
ry’s
impo
rtan
ce to
the
met
als
sect
or. A
sian
em
ergi
ng m
arke
ts
are
rela
tivel
y fr
agm
ente
d, w
hich
may
con
trib
ute
to d
eal fl
ow
from
this
regi
on.
Asi
a an
d O
cean
ia a
lso
dom
inat
ed in
boun
d de
als,
wit
h $7
.9 b
illio
n of
the
$11.
9 bi
llion
tota
l. Si
mila
r to
the
loca
l dea
l int
eres
t,
we
expe
ct th
at A
sia
and
Oce
ania
will
see
larg
e in
boun
d ac
tivity
as
com
pani
es in
oth
er re
gion
s se
ek a
foot
hold
in e
mer
ging
na
tions
suc
h as
Indi
a an
d C
hina
.
Euro
pe, o
n th
e ot
her h
and,
was
the
prim
ary
driv
er fo
r out
boun
d de
als
in 2
011,
wit
h fi v
e de
als
valu
ed a
t $2.
8 bi
llion
. One
dr
iver
of t
his
activ
ity m
ight
be
that
Eur
opea
n in
vest
ors
seek
hig
her g
row
th ra
tes
than
may
be
avai
labl
e fr
om d
omes
tic
econ
omie
s. In
add
ition
, con
cern
s re
mai
n ab
out l
ocal
eco
nom
ic c
ondi
tions
suc
h as
sov
erei
gn d
ebt r
isk,
cre
dit r
atin
g do
wng
rade
s, a
nd th
e po
ssib
ility
of a
futu
re re
cess
ion.
Fo
rgin
g a
hea
d
9
Per
spec
tive
:Th
ough
ts o
n m
etal
s de
al a
ctiv
ity
in th
e fo
urth
qua
rter
of 2
011
In th
e fo
urth
qua
rter
, we
saw
an
incr
ease
in b
oth
deal
vo
lum
e an
d va
lue
over
the
thir
d qu
arte
r. A
vera
ge d
eal
valu
e in
crea
sed
as w
ell.
On
an a
nnua
l bas
is, h
owev
er,
aver
age
deal
val
ue d
eclin
ed. T
he B
HP-
Bill
iton
dea
l of t
he
seco
nd q
uart
er o
f 201
0 sk
ewed
ann
ual fi
gur
es; a
bsen
t thi
s w
ithd
raw
n de
al, b
oth
tota
l val
ue a
nd v
olum
e w
ould
hav
e in
crea
sed
in 2
011,
alt
houg
h av
erag
e de
al v
alue
wou
ld s
till
have
bee
n do
wn
slig
htly
.
Like
the
impr
ovem
ent i
n to
tal d
eal v
alue
, the
incr
ease
of
aver
age
deal
val
ue in
the
four
th q
uart
er r
efl e
cts
incr
ease
d m
ega-
deal
act
ivit
y (d
eals
val
ued
at $
1 bi
llion
or
mor
e).
Ove
rall,
four
th-q
uart
er a
vera
ge v
alue
incr
ease
d by
mor
e th
an 2
0% o
ver
the
thir
d qu
arte
r fo
r de
als
valu
ed a
t $5
0 m
illio
n or
mor
e.
Dur
ing
the
past
two
year
s, w
e ha
ve s
een
an in
crea
se in
cas
h ba
lanc
es, w
hile
deb
t to
capi
tal l
evel
s ha
ve d
eclin
ed,
indi
cati
ng th
at p
oten
tial
acq
uire
rs a
re b
ecom
ing
bett
er
capi
taliz
ed o
ver
the
long
term
. At t
he s
ame
tim
e, w
hile
the
prop
orti
on o
f dea
ls in
volv
ing
stoc
k sw
aps
has
incr
ease
d,
indi
cati
ng th
e ab
ility
to fi
nanc
e ex
pans
ion
wit
h eq
uity
, le
vera
ged
buyo
uts
have
dec
lined
, as fi n
anci
al in
vest
ors
show
so
me
relu
ctan
ce to
eng
age
in d
eals
.
As
in th
e th
ird
quar
ter,
thre
e m
ega-
deal
s w
ere
anno
unce
d in
th
e fo
urth
qua
rter
: the
pro
pose
d ac
quis
ition
s of
Chi
na-b
ased
H
ebei
Sho
ugan
g Q
ian’
an Ir
on &
Ste
el, B
razi
l-bas
ed U
sina
s Si
deru
rgic
as d
e M
inas
Ger
ais,
and
US-
base
d C
omm
erci
al
Met
als.
Val
ued
at $
7.36
bill
ion,
thes
e th
ree
deal
s w
ere
a ke
y dr
iver
of d
eal v
alue
this
qua
rter
, com
pris
ing
mor
e th
an h
alf
of th
e to
tal f
or a
nnou
nced
dea
ls in
our
repo
rt.
On
a re
gion
al b
asis
, Asi
a an
d O
cean
ia d
rove
ove
rall
deal
va
lue
for
2011
. The
maj
orit
y of
the
loca
l dea
ls (
thos
e w
ithi
n
nati
onal
bor
ders
) w
ere
also
led
by A
sia
and
Oce
ania
. We
expe
ct th
at th
is r
egio
n w
ill c
onti
nue
to d
rive
loca
l dea
l ac
tivi
ty in
201
2, a
s C
hina
mak
es p
rogr
ess
in c
onso
lidat
ing
its
dom
esti
c m
etal
s in
dust
ry, a
goa
l of i
ts m
ost r
ecen
t Fiv
e Ye
ar P
lan.
Des
pite
the
gain
s in
the
deal
env
iron
men
t thi
s qu
arte
r,
the
outl
ook
for
the
near
term
is u
ncer
tain
. The
col
laps
e of
al
umin
um p
rice
s ha
s im
pact
ed th
e bo
ttom
line
s of
larg
e pr
oduc
ers,
red
ucin
g th
e ca
pita
l ava
ilabl
e fo
r ac
quis
itio
ns.
Exac
erba
ting
the
issu
e, a
ccum
ulat
ing
stoc
k le
vels
and
sof
t ec
onom
ic c
ondi
tion
s ha
ve fu
rthe
r af
fect
ed p
rici
ng: P
rice
s ha
d fa
llen
by 2
3% in
Dec
embe
r fr
om a
n A
pril
high
. Som
e co
mpa
nies
may
profi t
from
mer
gers
as
pric
es a
re d
eclin
ing
(refl
ect
ing
over
capa
city
in th
e se
ctor
) by
incr
easi
ng th
eir
com
peti
tive
ness
thro
ugh
inor
gani
c gr
owth
.
Ther
e is
a p
oten
tial
of a
slo
wdo
wn
in th
e st
eel i
ndus
try
give
n w
eake
ning
glo
bal d
eman
d an
d th
e ti
ghte
r co
ntro
l of
the
Chi
nese
rea
l est
ate
mar
ket.
At t
he s
ame
tim
e, s
teel
pr
ices
app
ear
to h
ave
stab
ilize
d, a
t lea
st fo
r no
w; t
he A
ME
Stee
l Ind
ex in
crea
sed
appr
oxim
atel
y 5%
in 2
011.
Des
pite
ste
el p
rice
sta
bilit
y, th
ough
, the
re is
stil
l cau
se fo
r co
ncer
n. T
he w
eak
cons
truc
tion
end
mar
ket i
s co
ntri
butin
g to
so
ft e
arni
ngs,
giv
en th
at it
acc
ount
s fo
r app
roxi
mat
ely
half
of
wor
ldw
ide
stee
l dem
and.
How
ever
, thi
s co
uld
be o
ffse
t by
grea
ter d
eman
d fr
om th
e en
ergy
sec
tor—
thro
ugh
an in
crea
se
in a
ctiv
ity re
late
d to
oil
and
gas
drill
ing,
for i
nsta
nce.
Ove
rall,
giv
en th
e cu
rren
t eco
nom
ic e
nvir
onm
ent,
Pw
C
expe
cts
mod
erat
e de
al g
row
th in
201
2. It
is d
oubt
ful t
hat
we
will
see
rob
ust g
row
th, h
owev
er, u
ntil
met
al p
rice
s an
d ot
her
fund
amen
tals
incl
udin
g m
argi
ns im
prov
e.
10
P
wC
Co
mm
enta
ry
Dea
l act
ivit
y b
y nu
mb
er o
f d
eals
Mea
sure
d b
y an
noun
ced
dea
ls w
orth
$50
mill
ion
or m
ore
(201
0, 2
011,
4Q
11)
Qua
rter
ly m
etal
s d
eal a
ctiv
ity
Mea
sure
d b
y nu
mb
er a
nd v
alue
of d
eals
wor
th $
50 m
illio
n or
mor
e
2009
2010
2011
1Q2Q
3Q4Q
1Q2Q
3Q4Q
1Q2Q
3Q4Q
Num
ber
of d
eals
18
1724
3825
2333
2528
4125
28
Tota
l dea
l val
ue (U
S$
bil)
11.8
63.1
7.5
10.6
8.1
17.5
53.4
13.7
23.9
8.5
9.7
13.1
Ave
rage
dea
l val
ue (U
S$
bil)
0.7
3.7
0.3
0.3
0.3
0.8
1.6
0.5
0.9
0.2
0.4
0.5
Not
e: S
um o
f qua
rter
ly d
eal v
alue
s m
ay n
ot m
atch
tot
al d
eal v
alue
cha
rt b
elow
bec
ause
of r
ound
ing.
Dea
l va
lues
co
nti
nu
e to
incr
ease
in f
ou
rth
qu
art
er
Bot
h th
e nu
mbe
r of
dea
ls in
the
met
als
indu
stry
and
thei
r va
lue
incr
ease
d in
the
four
th q
uart
er. W
ith
28 d
eals
val
ued
at
$50
mill
ion
or m
ore,
tota
l val
ue in
crea
sed
to $
13.1
bill
ion.
Thi
s is
an
incr
ease
from
the
25 d
eals
val
ued
at $
9.7
billi
on in
th
e th
ird
quar
ter.
Alo
ng w
ith
incr
ease
in th
e to
tal d
eal v
alue
, ave
rage
val
ue a
lso
grew
for
the
quar
ter
from
$38
8 m
illio
n to
$46
8 m
illio
n.
In a
yea
r-ov
er-y
ear
com
pari
son,
ther
e w
as a
slig
ht in
crea
se fr
om 4
Q10
to 4
Q11
in d
eal v
olum
e, fr
om 2
5 to
28.
But
the
tota
l va
lue
of th
ese
deal
s de
clin
ed fr
om $
13.7
bill
ion
to $
13.1
bill
ion.
Sixt
een
mor
e de
als w
ere
mad
e in
201
1 th
an 2
010
for M
&A
val
ued
at $
50 m
illio
n or
gre
ater
. But
thes
e de
als’
valu
e re
pres
ente
d a
subs
tant
ial d
eclin
e, fr
om $
92.6
bill
ion
to $
55.2
bill
ion.
Thi
s 40%
dec
line
in v
alue
dro
ve a
stee
p de
crea
se in
ave
rage
dea
l va
lue
as w
ell,
from
$87
4 m
illio
n to
$45
2 m
illio
n. H
owev
er, h
ad th
e w
ithd
raw
n BH
P-Bi
llito
n de
al (
valu
ed a
t $39
.8 b
illio
n)
been
exc
lude
d, 2
011
wou
ld h
ave
exce
eded
201
0 in
bot
h de
al v
alue
($5
5.2
billi
on v
ersu
s $52
.8 b
illio
n) a
nd v
olum
e. A
nd so
20
11 w
as a
robu
st y
ear f
or m
etal
s M&
A a
ctiv
ity w
hen
rem
ovin
g th
e im
pact
for t
his o
utlie
r.
Dea
l act
ivit
y b
y to
tal d
eal v
alue
*M
easu
red
by
valu
e of
ann
ounc
ed d
eals
wor
th $
50 m
illio
n or
mor
e(2
010,
201
1, 4
Q11
)
020406080100
120
140
4Q11
(2
8 To
tal D
eals
)20
11
(122
Tot
al D
eals
)20
10
(106
Tot
al D
eals
)
56
244
41
26
With
dra
wn
Pen
din
g, u
ncon
diti
onal
, or
inte
nded
Com
ple
ted
70
8
9
Number of deals
020406080100
4Q11
($
13.1
bill
ion
tota
l dea
l val
ue)
2011
($
55.1
bill
ion
tota
l dea
l val
ue)
2010
($
92.6
bill
ion
tota
l dea
l val
ue)
30.6
0.6
1.8
4.6
18.5
39.8
With
dra
wn
Pen
din
g, u
ncon
diti
onal
, or
inte
nded
Com
ple
ted
BH
P-B
illito
n
US $ billions
17.6
34.9
12.5
Fo
rgin
g a
hea
d
15
Th
ree
meg
a-d
eals
dri
ve f
ou
rth
-qu
art
er
gro
wth
Follo
win
g on
the
thre
e m
ega-
deal
s (d
eals
val
ued
at $
1 bi
llion
or
mor
e) a
nnou
nced
in th
e th
ird
quar
ter,
thre
e m
ore
meg
a-de
als
wer
e an
noun
ced
in th
e fo
urth
qua
rter
, all
in N
ovem
ber.
Wit
h a
valu
e of
alm
ost $
7.4
billi
on, t
hese
thre
e de
als
com
pris
ed m
ore
than
hal
f of t
otal
val
ue fo
r dea
ls v
alue
d at
$50
mill
ion
or m
ore.
The
larg
est d
eal,
valu
ed a
t $2.
92 b
illio
n, is
the
plan
ned
take
over
of H
ebei
Sho
ugan
g Q
ian’
an Ir
on &
Ste
el, a
Chi
na-
base
d m
anuf
actu
rer
of s
teel
and
iron
pro
duct
s, b
y B
eijin
g Sh
ouga
ng, a
maj
orit
y-ow
ned
unit
of C
hine
se s
tate
-ow
ned
Shou
gang
Cor
pora
tion
, in
a re
vers
e ta
keov
er tr
ansa
ctio
n.
This
Chi
nese
wit
hin-
bord
er tr
ansa
ctio
n is
indi
cati
ve o
f ex
pect
ed fu
ture
dea
ls in
Chi
na, g
iven
the
Nov
embe
r an
noun
cem
ent b
y th
e C
hine
se g
over
nmen
t of i
ts T
wel
fth
Five
Yea
r Pl
an fo
r th
e st
eel i
ndus
try.
The
pla
n in
clud
es
spee
ding
up
the
mer
gers
and
acq
uisi
tion
s in
sev
eral
in
dust
ries
, inc
ludi
ng s
teel
. Aft
er th
e st
eel i
ndus
try
was
ra
nked
sec
ond
in im
port
ance
am
ong
the
eigh
t key
indu
stri
es
defi n
ed in
Jul
y, it
was
ran
ked fi r
st in
impo
rtan
ce a
t a
wor
king
mee
ting
hel
d in
Dec
embe
r. It
is b
elie
ved
by
obse
rver
s th
e hi
gher
ran
king
is c
lose
ly li
nked
to p
oor
perf
orm
ance
wit
hin
Chi
na’s
stee
l ind
ustr
y.
The
sec
ond-
larg
est d
eal w
as th
e $2
.88
billi
on a
cqui
siti
on
of a
13.
78%
sta
ke in
Bra
zil-
base
d fl a
t ste
el p
rodu
cer
Usi
nas
Side
rurg
icas
de
Min
as G
erai
s SA
(U
sim
inas
) by
an
inve
stor
gr
oup
com
pris
ing
Tern
ium
SA
of A
rgen
tina
, Sid
erar
of
Arg
enti
na, P
rosi
d In
vest
men
ts S
CA
of U
rugu
ay, a
nd
Bra
zil-
base
d C
onfa
b In
dust
rial
SA
. Thi
s is
als
o on
e of
se
vera
l meg
a-de
als
invo
lvin
g B
razi
lian
targ
ets
in 2
011,
in
clud
ing
the
$2.5
bill
ion
acqu
isit
ion
of V
ale
S.A
. in
Apr
il an
d Su
mit
omo
Cor
p.’s
Jun
e ac
quis
itio
n of
Min
erca
o U
sim
inas
for
$1.9
2 bi
llion
.
Fina
lly, b
illio
nair
e C
arl I
cahn
, thr
ough
Icah
n En
terp
rise
s,
laun
ched
a $
1.56
bill
ion
host
ile te
nder
off
er to
acq
uire
th
e re
mai
ning
90.
03%
, whi
ch h
e di
d no
t alr
eady
ow
n, in
C
omm
erci
al M
etal
s C
o., a
Cal
iforn
ia-b
ased
man
ufac
ture
r an
d w
hole
sale
r of
ste
el a
nd m
etal
pro
duct
s. C
omm
erci
al
Met
als’
boa
rd o
f dir
ecto
rs h
as r
ecom
men
ded
that
sto
ck-
hold
ers
reje
ct th
e of
fer,
and
Icah
n ha
s in
dica
ted
that
he
will
dr
op h
is p
roxy
fi gh
t if h
e is
not
abl
e to
acq
uire
at l
east
the
addi
tion
al 4
0.1%
of s
hare
s ne
eded
to g
ain
cont
rol.
14
P
wC
Meg
a-d
eals
in 2
011
(val
ue o
f $1
bill
ion
or
mo
re)
Mo
nth
anno
unce
dTa
rget
nam
eTa
rget
nat
ion
Acq
uire
r na
me
Acq
uire
rna
tio
nS
tatu
s
Valu
e o
ftr
ansa
ctio
nin
US
$ b
il.C
ateg
ory
Feb
Sum
itom
o M
etal
In
dus
trie
s Lt
dJa
pan
Nip
pon
Ste
el C
orp
Jap
anP
end
ing
9.43
Ste
el
Jan
Con
solid
ated
Tho
mp
son
Iron
Min
es L
tdC
anad
aC
liffs
Nat
ural
Res
ourc
es In
cU
nite
d
Sta
tes
Com
ple
ted
4.36
Iron
ore
Nov
Heb
ei S
houg
ang
Qia
n'an
Iro
n&S
teel
Co
Ltd
Chi
naB
eijin
g S
houg
ang
Co
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Chi
naP
end
ing
2.92
Ste
el
Nov
Usi
nas
Sid
erur
gica
s d
e M
inas
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ais
SA
{Usi
min
as}
Bra
zil
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stor
Gro
upA
rgen
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din
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Jan
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em A
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orw
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Nat
iona
l B
lues
tar(
Gro
up) C
o Lt
dC
hina
Com
ple
ted
2.18
Alu
min
um
Mar
Cia
Bra
sile
ira
de
Met
alur
gia
e M
iner
acao
{CB
MM
}
Bra
zil
Inve
stor
Gro
upJa
pan
Pen
din
g1.
95O
ther
Sep
Cia
Bra
sile
ira
de
Met
alur
gia
e M
iner
acao
{CB
MM
}
Bra
zil
Chi
na N
iob
ium
Inve
stm
ent
Hol
din
g C
oC
hina
Com
ple
ted
1.95
Oth
er
Nov
Com
mer
cial
Met
als
Co
Uni
ted
Sta
tes
Icah
n E
nter
pris
es L
PU
nite
d
Sta
tes
Pen
din
g1.
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teel
Jul
Sun
dan
ce R
esou
rces
Lt
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ustr
alia
Han
long
Min
ing
Inve
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ent
Pty
Ltd
Aus
tral
iaP
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ing
1.27
Iron
ore
Mar
Sev
erst
al N
orth
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eric
a W
arre
n W
heel
ing
Op
sU
nite
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tate
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e R
enco
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up In
cU
nite
d
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tes
Com
ple
ted
1.19
Ste
el
Meg
a-d
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in 4
Q11
(val
ue o
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bill
ion
or
mo
re)
Mo
nth
anno
unce
dTa
rget
nam
eTa
rget
nat
ion
Acq
uire
r na
me
Acq
uire
rna
tio
nS
tatu
s
Valu
e o
ftr
ansa
ctio
nin
US
$ b
il.C
ateg
ory
Nov
Heb
ei S
houg
ang
Qia
n’an
Iro
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teel
Co
Ltd
Chi
naB
eijin
g S
houg
ang
Co
Ltd
Chi
naP
end
ing
2.92
Ste
el
Nov
Usi
nas
Sid
erur
gica
s d
e M
inas
Ger
ais
SA
{Usi
min
as}
Bra
zil
Inve
stor
Gro
upA
rgen
tina
Pen
din
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teel
Nov
Com
mer
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als
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ted
Sta
tes
Icah
n E
nter
pris
es L
PU
nite
d
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tes
Pen
din
g1.
56S
teel
Fo
rgin
g a
hea
d
11
Ave
rage
dea
l va
lues
incr
ease
in 4
Q1
1
dri
ven
by
larg
er d
eals
Sim
ilar
to th
e in
crea
se in
tota
l dea
l val
ue fr
om th
e th
ird
quar
ter
of 2
011
to th
e fo
urth
qua
rter
, the
impr
ovem
ent
in a
vera
ge d
eal v
alue
refl
ect
s th
e an
noun
cem
ent o
f thr
ee
meg
a-de
als.
Ove
rall,
the
aver
age
valu
e fo
r de
als
valu
ed a
t $5
0 m
illio
n or
mor
e in
crea
sed
in th
e fo
urth
qua
rter
from
$3
88 m
illio
n to
$46
8 m
illio
n, a
qua
rter
ly in
crea
se o
f mor
e th
an 2
0%.
On
an a
nnua
l bas
is, a
vera
ge d
eal v
alue
dec
lined
from
$8
73 m
illio
n to
$45
2 m
illio
n. H
owev
er, a
bsen
t the
wit
h-dr
awn
BHP-
Billi
ton
deal
, ave
rage
dea
l val
ue w
ould
hav
e de
clin
ed b
y m
uch
less
, fro
m $
503
mill
ion
to $
452
mill
ion.
Ba
sed
on th
e re
sults
for t
he y
ear,
it ap
pear
s th
at w
hile
mor
e de
als
are
bein
g tr
ansa
cted
, the
y te
nd to
be
smal
ler.
Dea
l act
ivit
y b
y av
erag
e d
eal v
alue
Mea
sure
d b
y va
lue
of a
nnou
nced
dea
ls w
orth
$50
mill
ion
or m
ore
(201
0, 2
011,
4Q
11)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
4Q11
2011
2010
0.9
With
dra
wn
Pen
din
g, u
ncon
diti
onal
, or
inte
nded
Com
ple
ted
Tota
l
US $ billions
0.5
0.4
4.9
0.5
0.4
0.5
0.2
0.5
0.5
0.3
0.0
12
P
wC
Acq
uir
ers
are
rel
yin
g o
n e
qu
ity
to
ad
van
ce d
eals
A r
evie
w o
f the
top
50 p
ublic
ly tr
aded
glo
bal c
ompe
tito
rs
reve
als
that
thes
e co
mpa
nies
hav
e in
crea
sed
thei
r ca
sh
bala
nces
ove
r th
e pa
st tw
o ye
ars.
Cas
h gr
ew to
$2.
58 b
illio
n in
201
1, c
ompa
red
wit
h $2
.33
billi
on in
201
0 an
d $1
.93
billi
on fo
r 20
09.
Ove
r th
e sa
me
peri
od, d
ebt t
o ca
pita
l dec
lined
, ind
icat
ing
that
pot
enti
al a
cqui
rers
am
ong
met
als
com
pani
es a
re
beco
min
g be
tter
cap
ital
ized
ove
r th
e lo
ng te
rm.
This
qua
rter
saw
an
incr
ease
in s
tock
sw
aps.
Sto
ck s
wap
s oc
cur
whe
n a
com
pany
exc
hang
es e
quit
y in
itse
lf fo
r eq
uity
in
the
targ
et. T
he a
cqui
rer
is a
cqui
ring
at l
east
50%
of t
he
targ
et’s
equi
ty o
r th
e re
mai
ning
inte
rest
up
to 1
00%
of t
he
targ
et’s
equi
ty, a
nd a
t lea
st 5
0% o
f the
con
side
rati
on o
ffer
ed
is in
the
form
of e
quit
y.
Sinc
e co
mpa
nies
are
usi
ng m
ore
equi
ty, t
hey
may
hav
e a
grea
ter fl e
xibi
lity
to e
ngag
e in
larg
er d
eals
in th
e fu
ture
. At
the
sam
e ti
me,
leve
rage
d bu
yout
s ar
e de
clin
ing,
whi
ch is
in
dica
tive
of t
he r
ecen
t dec
reas
e in
the
prop
orti
on o
f dea
ls
we
have
see
n by
fi na
ncia
l inv
esto
rs.
Thus
, whi
le fi
nanc
ial i
nves
tmen
t has
dec
reas
ed, s
trat
egic
in
vest
men
ts a
ppea
r to
be s
tron
g. C
urre
nt tr
ends
indi
cate
that
w
e m
ay s
ee a
n in
crea
se in
the
size
and
/or v
olum
e of
dea
ls a
s pr
oduc
ers
seek
add
ition
al g
row
th th
roug
h ac
quis
ition
s.
In th
e lo
ng te
rm, w
e ex
pect
fi na
ncia
l inv
esto
rs w
ill r
etur
n to
the
deal
env
iron
men
t. B
ut th
ey a
re li
kely
to fo
cus
on
dow
nstr
eam
targ
ets.
Ups
trea
m a
sset
s w
ill li
kely
rem
ain
in
the
purv
iew
of s
trat
egic
acq
uire
rs. T
he r
easo
ns fo
r th
is
incl
ude
the
inhe
rent
vol
atili
ty, p
olit
ical
ris
k, a
nd p
oten
tial
ly
long
er h
oldi
ng p
erio
d re
quir
ed fo
r up
stre
am a
cqui
siti
ons.
Fina
ncia
l lev
erag
eM
easu
red
by
aver
age
of t
op 5
0 gl
obal
pub
lic c
omp
etito
rs
(Y-2
, Y-1
, MR
Q)
Aq
uisi
tio
n ch
arac
teri
stic
sM
easu
red
by
per
cent
age
of d
eals
wor
th $
50 m
illio
n or
mor
e (2
010,
201
1, 4
Q11
)
0%25%
50%
75%
100%
Mos
t re
cent
qua
rter
1 ye
ar a
go2
year
s ag
o$0
.00
$0.5
0
$1.0
0
$1.5
0
$2.0
0
$2.5
0
$3.0
0
17.7
%19
.5%
16.8
%
Cas
h an
d e
qui
vale
nts
$ b
illio
ns (r
ight
axi
s)
Tota
l deb
t/to
tal c
apita
l (le
ft a
xis)
Sou
rce:
Com
pan
y
0%1%2%3%4%5%6%7%8%
4Q11
2011
2010
Sto
ck s
wap
Leve
rage
d b
uyou
t
3.77
%
4.70
%
2.46
%
6.60
%7.
10%
0.00
%
Fo
rgin
g a
hea
d
13
Meg
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eals
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ue o
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ion
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mo
re)
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nth
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rget
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eTa
rget
nat
ion
Acq
uire
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me
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uire
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nS
tatu
s
Valu
e o
ftr
ansa
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nin
US
$ b
il.C
ateg
ory
Aug
Pot
ash
Cor
p o
f S
aska
tche
wan
Inc
Can
ada
BH
P B
illito
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Kin
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With
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Iron
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sim
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orp
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teel
Va
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o Lt
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u S
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el C
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din
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Ger
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1.61
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el
Nov
Dra
ka H
old
ing
NV
Net
herla
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jin X
inm
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cien
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Te
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Co
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raw
n1.
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ther
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to P
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outh
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a O
per
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ty)
Ltd
Sou
th A
fric
aLe
xshe
ll 77
1 In
vest
men
ts(P
ty)
Ltd
Sou
th A
fric
aP
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1.26
Ste
el
Nov
Dra
ka H
old
ing
NV
Net
herla
nds
Pry
smia
n S
pA
Italy
Com
ple
ted
1.26
Oth
er
Mar
Itam
inas
Com
erci
o d
e M
iner
ios
SA
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zil
Eas
t C
hina
Min
eral
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ent
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Chi
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end
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1.22
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er
Jul
Par
anap
anem
a S
AB
razi
lVa
le S
AB
razi
lW
ithd
raw
n1.
14O
ther
Jul
JSW
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el L
tdIn
dia
JFE
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el C
orp
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anC
omp
lete
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ithd
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02O
ther