According to The Australian Financial Review, the handful of recent mining services deals could provide a catalyst for a wave of merger and acquisition activity in the sector, according to analysts and advisers.
Contractor Downer EDI's $1.2 billion hostile takeover bid for commercial services provider Spotless, CIMIC's foiled attempt to take over mining contractor Macmahon Holdings and rental group Emeco's three-way merger with rivals Orionstone and Andy's Earthmover have shaken up the status quo in the battered sector.
PPB advisory partner Cambell Jaski said conditions were ripe for mergers and acquisitions to pick up.
"We have seen that when the mining sector turns from full-scale development into production it creates an oversupply of mining services contractors and it is difficult for the contractors to deal with that," he told The Australian Financial Review.
"There needs to be consolidation in the sector to reduce that oversupply. We have seen a lot of examples where companies have tried to go it alone just with a straight restructure rather than a restructure and consolidation play and those attempts have failed, with McAleese being one example."
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