Public Mergers and Acquisitions Australia: The Changing Landscape
When it comes to mergers and acquisitions in Australia, the changing economic landscape means that stakeholder behaviour, changing regulation, global activity, and so on, can affect the nature of M&A deals. While still representing high value to the relevant industries, the instability and unpredictability of global financial markets coupled with increasingly complex regulations have contributed to a drop in deals and a rise in hostile bids.
High Profile and Valuable
In Australia, the average public M&A deal is valued at around $398 million. In the 2016 Financial Year in Australia, there were 31 such deals valued at more than $100 million. For the most part, the majority of such deals can be deemed as ‘friendly’. Nonetheless, hostile deals continue to be on the rise. Most public mergers and acquisitions in Australia take place in the following markets:
Healthcare
Food and agribusiness
Financial services
They often involve a law firm’s many sectors. These include:
Real property
Competition
Intellectual property
Banking and financing
IT
Due diligence
Litigation
More Friendly Deals
Friendly public mergers and acquisitions refer to the ones that a specific board recommends, especially when superior proposals are absent. Statistics show that the number of friendly transactions has dropped from 88% in FY15 to 68% in FY16. As friendly deals experience this drop, hostile bids are witnessing a significant rise. As you might have grasped from this, hostile bids refer to the ones the board does not recommend.
Dropping Volume of Deals
Also, the volume of Public Mergers and Acquisitions deals in Australia dropped significantly in FY16 compared to FY15. The total value for all deals was an impressive $33.2 billion. The overall success rate in FY16 was 73 per cent. Hostile bids, which (as previously stated) refer to the ones that proceeded without the support of the board, were 45 per cent. The number of deals that were announced in FY16 was considerably lower compared to FY14 and FY15. Clients involved in negotiations regarding Public Mergers and Acquisitions have one overriding goal – to succeed. These deals and transactions are crucial to the parties involved. The fact that all mergers and acquisitions often go to the board for discussions, which can be lengthy and quite animated, has also helped place more focus on them. The negotiations are not only critical but also rather complex. Traditionally high-profile as well as high-value, mergers and acquisitions have in the past few years been subject to closer scrutiny than ever before by the ACCC, with tighter regulations, greater risk for penalties, and greater application costs. Taxation requirements have also grown to become more comprehensive, with rules surrounding special dividends, thin capitalization, and non-resident capital gains having to be considered. As a result, M&A deals in Australia can often take longer to finalize – with greater caution from shareholders, costly requirements, and increasingly complex requirements.
What do I do now?
Contact us if you would like to have more information on public mergers and acquisitions. Our lawyers at You Legal will be happy to assist you in whatever way we can.
* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.