PwC recently said that M&A activity in global metals sector experiences significant deterioration during first quarter 2009, marking its second consecutive quarter of decline.

According to a report released today by PricewaterhouseCoopers, the pace of global deal activity in the metals industry significantly declined in Q1 of 2009 as falling end arket demand and weak commodity prices created a difficult operating environment.

First-quarter 2009 mergers and acquisitions analysis by PwC highlights

1. 18 deals (5 completed; 13 pending or intended) with a disclosed value of at least USD 50 million each were announced in Q1 showing a strong slowdown compared with the 142 total deals of similar value in 2007 and 138 deals in 2008.

2. Total deal value declined sharply, resulting in only USD 12 billion in deals announced for metals targets in Q1, far behind the pace set in 2007 with USD 298.2 billion and in 2008 with USD 78.6 billion.

Although the pace of deals is showing a decline in 2009, PwC found that the average value for deals announced during the first quarter remained similar to the average value announced in 2008. Additionally, interest in minority stake purchases increased dramatically. Acquirers seeking less than 50% ownership accounted for more than 55% of the deals announced in first quarter 2009, up from 33% of deals announced in 2007 and 2008.

Mr Jim Forbes a global metals leader at PwC said that "The decline in deal activity for the metals sector in the beginning of 2009 does not come as a surprise, given the continued economic struggles this sector faces globally. With strategic buyers' general aversion to risk, as well as tight credit and weak commodity prices, we are likely to continue seeing acquisitions of minority stakes as the preferred deal type throughout 2009."