Getting back in the water: Consolidation in the global steel industry
Despite the current slowdown in consolidation, mergers and acquisitions (M&A) remains a critically important business strategy for steel manufacturers. While the economic downturn is a significant factor in short-term decisions regarding M&A activity, companies are expecting that they will be making acquisitions over the next three years.
In the report “Getting back in the water: Consolidation in the global steel industry”, Deloitte Touche Tohmatsu’s (DTT) Global Manufacturing Industry Group captures the perspectives of some of the major players in the steel industry. The study looks at their overall M&A strategies, the impact of the credit crisis and economic downturn, and the challenges they face in planning and executing acquisitions.
DTT found that in general, executives surveyed underscored the importance of developing and executing a successful acquisitions strategy by stating their intent to keep M&A squarely in view. However, while M&A will continue to play a key role in steel companies’ strategies going forward, many need to make progress in acquiring the key competencies required to effectively carry out an acquisition. In addition, beyond integration, companies should have an explicit plan to identify and capture the synergies that provide the rationale for an acquisition—and evaluate the potential non-financial obstacles such as potential cultural disconnects that must be overcome to be successful.