The major news coming out of the report is that
deal volume declined to 14 deals valued at $50 million or more in
the first quarter of 2016; however, deal value increased to $8.7
billion. The report concludes that the primary cause of this trend
is the increase in megadeals, which are deals valued at $1 billion
or more. Specifically, two Chinese based transactions made up 66%
of the total deal value: CRED Holdings' plans to acquire the
share capital of Liaoning Zhongwang Group, a manufacturer and
wholesaler of aluminum products for $4.7 billion; and the
acquisition of Shandong Yili Electric Power by Shandong Nanshan
Aluminum for $1.1 billion.
The deals in Q1 of 2016 were driven mainly by
the steel and aluminum segments of the metals industry. Aluminum
deals increased, and accounted for 36% of the quarter's deal
volume, compared to just 12% in the last quarter of 2015.
Additionally, both of the megadeals mentioned above were in the
aluminum segment of the industry. The report provides that
producers are using consolidation to increase efficiencies, which
in turn lower average costs, in order to compete more effectively
on the basis of cost, an advantage the report cites as being
traditionally needed by commodity producers.
In terms of the geography of the deals, the
report found that Asia and Oceania were the two leading acquirer
regions with 86% of the deals being located there. In particular
China was a strong driver of deals, with it making up 8 of the 12
deals in the region. The 8 deals in China were local-market based,
as producers are trying to increase scale and decrease pollution by
closing inefficient plants.
The authors of the report see room to be
optimistic about the industry going forward. The report states that
continued growth in the United States' economy, coupled with
improvements for the automotive and construction industries should
lead to an increase in demand for metals. Additionally, the report
believes that commodity prices will see an increase in 2016, and
that there will be an increase in demand from the Chinese and
Indian economies for metals such as steel and aluminum. As a
result, the report concludes that there will likely be a modest
increase in deal activity in the short term.
The author would like to thank Scott Pollock, articling
student, for his assistance in preparing this legal
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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