It’s a steel for advisers

Steel baron Lakshmi Mittal’s insatiable appetite for deals and the continuing
speculation around the future of FTSE 100 steel group Corus has kept UK advisers
in the sector busy, even though the bulk of deal activity is taking place in
emerging markets.

In an analysis of the sector, PricewaterhouseCoopers found that 250 metal
industry deals worth $35bn (£18.7bn) were completed in 2005. Over half of this
value came from deals located in central and eastern Europe, the Asia Pacific
and Latin America, but with London-based Mittal continuing to pursue substantial
acquisitions, UK corporate financiers have been able to take advantage of the
rapid consolidation in the sector.

Mittal won the auction to purchase Ukraine steel mill KryvorizhStal for
$4.6bn in October last year and in January 2006 launched an audacious bid to buy
the world’s second largest steelmaker Arcelor. The future of Corus in the midst
of this consolidation has also had local advisers preparing for more activity in
the future.

The consolidation of the sector is set to continue and will require
specialist accounting knowledge as most of the acquisition targets are located
in emerging markets.

Richard Sykes, global industrial products leader at PwC, says accountants are
needed to establish the ownership of assets targeted by consolidators and
convert accounts to IFRS.

‘There certainly are wider areas that need to be dealt with when working on a
deal in an emerging market. Understanding the history and ownership of assets is
crucial and changing from national accounting into IFRS needs to be done,’ he
says.