- KPMG is seeing significant M&A activity amongst mid-cap oil and gas companies
- Suppressed share prices will be a major factor in driving deals
KPMG is predicting major consolidation amongst mid-cap oil and gas companies, resulting from low share prices and investors’ concerns over market valuations.
Anthony Lobo, UK head of oil and gas at KPMG said, “Q1 upstream M&A activity totalled $39bn, a record high and up 75% on Q1 2013. Amongst this, we are currently seeing a significant amount of activity amongst mid-cap oil and gas companies, who have been under pressure from shareholders to improve market valuations and drive shareholder value.
“Investors have been patient in recent years, however, as long-term shareholder value rises high on the agenda, debt becomes more available and deal capacity continues to increase, transactions are being viewed as an option for mid-caps in fear of shareholder unrest.
“Corporate pressure is already triggering changes in executive teams and has raised the need for management to review their portfolios. Given the challenges in identifying and executing the right deal, these transactions may not always be value generating, however in today’s market, attack may be considered the best form of defence, and M&A activity at least demonstrates to shareholders that management have a strategy and are being proactive.
“With no sign of the gap between market and asset valuations closing, the pressure on management teams is set to remain, and we therefore expect to see further consolidation and activity amongst the mid-caps in future.”
Notes to editors:
For further information please contact:
Simon Chan, PR Assistant Manager, KPMG
Tel: +44 (0) 207 694 2024
Mobile: +44 (0) 7747 564 737
KPMG Press Office: 020 7694 8773
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.