We have recently published our 2012 Public Mergers & Acquisitions Report which is now available for distribution. The Report examines the 83 public takeovers and schemes involving ASX listed companies announced in the 2012 financial year.
The Report points to FY2012 being a period of relative stability in Australia’s M&A market despite global turbulence, with a notable decline in deal volume being offset by strong deal value. While success rates improved to a four year high of 81%, the developing lack of competitive auctions is a potential concern for target shareholders.
The Public M&A Report was the first study undertaken by an Australian-based law firm to examine the trends and structure of Australian public M&A. Now drawing on five years of statistics and analysis, the Report gives readers a real insight into how market conditions have evolved during the past five years and the future outlook for local M&A.
The Report’s key findings included the following:
- The value of deals announced in FY2012 was A$63 billion, which was a decrease of A$16 billion in funds committed by bidders during FY2011.
- Deals were announced in ‘bursts’, reflecting the extremely volatile nature of Australian and global markets in recent times, but also suggesting that bidders are looking to announce transactions during specific ‘windows of opportunity’, when market conditions offer bidding companies better prospects.
- Chinese bidders are becoming far more adept at successfully executing Australian public M&A, with success rates for Chinese bidders reaching 83% in FY2012 (as opposed to 57% last year).
- A number of relatively high-profile transactions were the subject of significant delays (and in some cases brought to an unhappy end) due to lengthy deliberations by offshore regulatory bodies in relation to necessary conditions.
- M&A activity in the energy and resources sectors continues to be a strong component of overall Australian activity – but there are now heartening signs for the broader economy that Australia is no longer as dependent on energy and resources as it was during the GFC.
- Ongoing consolidation in the coal sector has accounted for 10% of the number of total deals in FY2012 and a total of A$20 billion (or one third) of overall deal value.
- Cash consideration continues to be prevalent – in those cash deals, 49% were either partly or fully funded by debt, an encouraging finding given the levels of global uncertainty regarding perceived availability of debt.
- Private equity activity in public M&A stepped up for the fourth year running, with a dramatic increase in certain sectors including industrials, utilities and materials, a trend that is expected to continue.