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Cross-Border Mergers and Acquisitions in the Mining Sector—Lessons Learned From the Recent Wave of Transactions

Hendrik F. Jordaan, Michael N. Melanson, Proceedings of 52nd Annual Rocky Mountain Mineral Law Institute (2006)

[1] Level of M&A Activity
The global merger and acquisition (M&A) marketplace has witnessed significant activity and robust growth over the past few years—and many believe more is yet to come!
In 2005, the North American market posted 2,852 transactions totalling US$297.6 billion in transaction value, while the European market closed 2,785 transactions representing US$362.2 billion in transaction value.1 These figures constitute the highest [24-4] M&A totals in five years.2 According to the Organization for International Investment, in 2005, the United States had its highest amount of “Foreign Direct Investment” since 2001,3 with capital flow from Europe totalling US$78.8 billion,4 and reflecting a 300% increase in investment from Latin and South America.5
The Canadian marketplace has continued to experience high levels of M&A activity, with the aggregate value of transactions almost doubling from 2004 to 2005. This trend has been no truer than in the mining sector. Although the 23 M&A transactions completed in the gold sector in 2005 actually decreased from the 34 transactions in 2004, the aggregate value of those transactions increased from Cdn$3.3 billion in 2004 to Cdn$14.3 billion in 2005. In the metals and minerals sector, the aggregate value of the 68 transactions completed in 2005 was Cdn$21.7 billion, an increase from 51 transactions valued at Cdn$3.3 bil