Foreign investors were involved in all seven of the Australian-based public takeovers and schemes of arrangement over $1 billion announced in the last financial year, according to the inaugural Freehills 2009 Public Mergers & Acquisitions Report released today.
Freehills’ Corporate M&A partner, Simon Reed said, ‘Despite Australian companies raising a record $90 billion in financial year 2009*, they have not yet launched the big deals, which have been driven by foreign bidders. We are likely to see more Australian bidder involvement in the current financial year, now that they have secured their balance sheets and equity markets confidence returns.’
According to the Freehills Report, the biggest public M&A deals involved overseas investors spread across China, Japan, US, Canada and the UK, and of these, the resources sectors accounted for four of the top seven transactions.
‘The resources sector continues to underpin the action in Australian M&A, with overseas investment accounting for the biggest deals. The unprecedented turmoil in the financial and capital markets certainly hasn’t killed off M&A activity, but it has had an impact on the way these deals are done,’ Mr Reed said.
Freehills’ first annual report on public transactions, conducted by way of takeover or scheme of arrangement, examines developments in M&A deal technology, provides insights into the structure and key terms of transactions and uncovers some interesting inter-relations between the deal structure and deal mechanics used and the potential impacts on success.
The Report investigates the trends arising out of the 72 takeovers and schemes of arrangements involving ASX listed companies announced during financial year 2009. Additional findings include:
- Despite the scarcity of available credit, almost half of the offers were still for cash or had a cash alternative
- Australian market participants are becoming more comfortable with schemes as a deal structure, but takeovers continue to account for more than two thirds of announced deals
- Bidders became more cautious in their approach: few unconditional bids were launched and certain conditions (such as Material Adverse Change conditions) were vigorously debated with target boards
- In a landscape of less competitive auctions for control, break fees were resisted in the majority of recommended transactions, and
- Regulator involvement was on the rise, with Foreign Investment approval becoming a closely scrutinised and critical element in Australian M&A.
Freehills continues to be the market’s choice in M&A and is the most active M&A law firm in the Asia-Pacific, advising on more deals than any other law firm in the region.
* according to the ASX June Report 2009.
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