Global coal M&A activity January 2020: thermal divisions under scrutiny

The 2019 collapse in coal sector deal-making surprised, although a decline was expected following a US$14 billion splurge over the previous two years. We estimate global coal spend (ex. China and India) fell to US$1.8 billion, a staggering 77% decline, while the number of deals nearly halved to 19. Falling coal prices and growing uncertainty in the outlook made it more difficult for sellers to realise target values and secure deals for the fewer, but lower quality assets that remained in the pipeline. Buyers remained wary, with M&A remaining lower in the capital allocation pecking order as investors called for higher returns, dividends and share buybacks. 2020 could see further announcements of planned divestment or spinoff of thermal coal assets or divisions by BHP, Anglo American, Sasol and others in an accelerated and strategic shift away from the commodity. Read the report to find out about: • 2019 deal list • Potential buyers and sellers in the pipeline