Li Ka-shing’s bid for a U.K. water utility, ArcelorMittal (MT) and Peabody Energy Corp. (BTU)’s joint offer for an Australian coal exporter and a Malaysian oilfield services merger have combined to set up July to become the biggest month for deals in the industries for four years. The $12.8 billion in transactions reported yesterday take the tally for July to $16.5 billion, compared with $28.9 billion in coal, mining, water and oilfield services industries mergers and acquisitions announced last month, according to data compiled by Bloomberg. The figure for June was the highest since July 2007 when $57.4 billion in transactions was unveiled, the data show. The deals show a “recognition that the large emerging economies like China and India are driving demand for several commodity items, therefore the profit margins are still quite attractive,” said Alan Richardson, a Singapore-based fund manager from Samsung Asset Management Co., which oversees about $82 billion. “If growth continues over the next five years, valuations could actually look quite cheap.” Resources companies are reviving transactions after a two- year commodities rally stalled, stemming a surge in prices for projects. While Asian efforts to curb inflation stoked concerns growth will slow, some forecasters are bullish on raw materials. Goldman Sachs Group Inc. (GS), which correctly predicted a slump in commodity prices in May, expects higher prices in six months for 17 of the 21 materials it covers, a June 14 report showed. Cheung Kong, SupuraCrest Peabody and ArcelorMittal plan to bid A$4.7 billion ($5.1 billion) for Macarthur Coal Ltd. (MCC) through a jointly owned company, the Brisbane-based company said yesterday. Billionaire Li’s Cheung Kong Infrastructure Holdings Ltd. (1038) proposed to buy Northumbrian Water Group Plc (NWG) for 2.4 billion pounds ($3.8 billion). Malaysia’s SapuraCrest Petroleum Bhd. (SCRES) and Kencana Petroleum Bhd. (KEPB) received an 11.9 billion ringgit ($3.9 billion) merger offer. ArcelorMittal, the world’s largest steelmaker, and Peabody, the biggest U.S. coal producer, offered A$15.50 cash a share for Macarthur, a 40 percent premium to its price before the offer. Its American depository receipts climbed 30 percent. The steelmaker, 41 percent-owned by Lakshmi Mittal, who topped the latest Sunday Times list of the wealthiest people in the U.K., said yesterday it holds about 16 percent of Macarthur’s stock. Buying Macarthur would give ArcelorMittal and Peabody ownership of mines producing steelmaking coal in Australia’s Queensland state, the world’s biggest exporter of the material, as prices trade near a record and suitors vie for targets. ‘Back as Targets’ The bid “puts the rest of the sector firmly back as takeover targets,” Colin McLelland, a resources analyst at Investec Bank Australia Ltd., said by phone from Sydney. Takeovers this month also include Jinchuan Group Co.’s $1.36 billion offer for African copper producer Metorex Ltd. (MTX), which topped a bid from Brazil’s Vale SA. (VALE3) Rio de Janeiro-based Vale decided not to increase its offer, Metorex said yesterday. “Companies are looking for producers of commodities that have supply constraints such as coking coal and copper,” said Ng Soo Nam, the Singapore-based chief investment officer at Nikko Asset Management Co., which oversaw about $154 billion as of March 31. “Demand for resources should continue to hold up especially in places like China and India where economic development is raw-material intensive.” China, Australia Cheung Kong Infrastructure, or CKI, made a revised offer of 465 pence a share for Northumbrian, the Durham, England-based company said, sending its share up 5 percent. The proposal is 9.1 percent higher than the utility’s closing price on July 8. CKI has invested in electricity, gas, water and road assets in New Zealand, Australia, China, the U.K. and Canada and has been looking for further acquisitions. Integral Key Sdn., a special-purpose vehicle, bid 4.60 ringgit a share in stock and cash for SapuraCrest and the equivalent of 3 ringgit a share for Kencana, the companies said in separate Kuala Lumpur exchange filings. The deal would create Malaysia’s second-largest listed oilfield services company. There have been $104 billion worth of deals in coal, mining, water and oilfield services this year, down 9 percent on the $114 billion of transactions announced in those industries for the same period last year, Bloomberg data show. Commodities prices slumped 11 percent in May and June, the worst losing streak since the end of 2008 on concern of a slowdown in economic growth. The last time the benchmark Standard & Poor’s GSCI index fell for two consecutive months, the gauge surged 36 percent in the next six months. To contact the reporters on this story: Jesse Riseborough in London at jriseborough@bloomberg.net; Brett Foley in London at bfoley8@bloomberg.net To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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