Merger and Acquisition Activity Increasing
Apr
1
Written by:
4/1/2010 6:31 PM
Newcrest's bid for Lihir Gold today joins a string of high profile M&A attempts of late and signals the intent of big mining companies with large cash surplus' going forward. Lihir's board today rejected the offer but signalled they may be more open to a higher bid in an effort to maximise the return for shareholders. LGL's shareprice closed up over $1 to $4.04 today.
Newcrest's bid alongside Peabody Energy's bid for Macathur Coal, Bright Food Group for CSR's sugar unit and Shell's successful bid for Arrow Energy signals an impressive return to M&A activity. Looking forward, it is hard to see a slow down in mergers and acquisitions given the cash surplus many larger material's companies will be building as a worldwide recovery continues to unfold. The stength in the materials sector should fuel purchases by larger diversified companies of the likes of BHP. Balance sheet strength and strong cash flows after the slowdown through 08/09 offer great opportunities to add new assets and fuel growth.