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M&A market set for upturn

6 July 2010

While the Thomson Reuters data on activity in Australia's mergers and acquisitions (M&A) market released yesterday shows a decrease in activity in the first half of the year, there are signs of an upturn, according to Allens Arthur Robinson (Allens) Co-Head of M&A Guy Alexander.

'In recent months, the debate over the super profits mining tax and the uncertain equity market conditions have hampered transactions getting off the ground. We think the announcement last Friday of an agreement between Government and industry on the Minerals Resource Rent Tax will help M&A activity, although the impact may not be felt until after the election,' said Mr Alexander.

Mr Alexander said that the firm had been busy in the first half of the year acting on the five largest deals in the market and is placed as the number one M&A legal adviser according to the Thomson Reuters data, based on value for announced deals in Australia-New Zealand. Allens acted on 35 deals in Australia-New Zealand in the half, with a value of more than US$25 billion.

Some of the deals that Allens worked on include:

  • Newcrest's proposed A$9.5 billion merger with Lihir Gold;
  • Canada Pension Plan Investment Board's and Ontario Teachers' Pension Plan's A$7 billion proposed acquisition of Transurban; and
  • Peabody Energy's A$4 billion bid for Macarthur Coal.

The Thomson Reuters data shows that overall M&A activity in Australia decreased by 33.8 per cent, totalling US$60.5 billion from the US$91.4 billion recorded last year.

'While the data shows that M&A activity has decreased since last year, Allens has had a busy first half of 2010. So we were a little surprised by the overall market result.'

The firm had also been acting on a significant number of transactions valued under $500,000.

'It's good to see companies in the ASX Top 500 continue to undertake deals and we saw an increasing number of deals across key sectors such as financial services, resources, listed property and infrastructure,' said Mr Alexander.

'Overall, we think the current uncertainty can only hold back positive momentum for so long. The final quarter of 2010 should see an increase in M&A deals.'

Ends

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Notes for editors.

Allens Arthur Robinson has staff in 14 cities and eight countries across the Asia Pacific.