Mergers and acquisitions activity in Australia hit a seven-year high last year and the good news for investors is that the average takeover premium was significantly higher.
Law firm Gilbert + Tobin looked at all the public M&A transactions worth more than $50 million last year for its latest Takeovers + Schemes Review. There were 49 transactions last year, compared with 41 the year before.
The value of last year’s M&A deals was $48.7 billion, compared with $41.6 billion in 2017 and $24.6 billion in 2016.
There was a significant increase in the completion rate of transactions, with a success rate of 83 per cent last year compared with 70 per cent the year before.
The average premium paid by bidders rose from 33 per cent in 2017 to 48 per cent last year.
The big deals were in telecommunications, real estate investment trusts, retail and consumer services, media and professional services.
Among the big deals were Vodafone Hutchinson’s proposed merger with TPG Telecom, which is still being looked at by the ACCC, Nine Entertainment’s takeover of Fairfax Media, KKR’s acquisition of MYOB and Oxford Properties’ acquisition of Investa Office.
Foreign buyers accounted for 59 per cent of transactions. French outdoor advertising company JCDecaux SA acquired APN Outdoor Group, China’s CDH Genentech acquired Sirtex Medical, and US housing estate operator Hometown America acquired Gateway Lifestyle.
“On average, foreign bidders were involved in significantly larger transactions than their local bidders.”
Private equity firms accounted for 24 per cent of transactions. KKR’s $2 billion acquisition of MYOB was the most notable. Others included Affinity Equity Partners’ $630 million acquisition of finance company Scottish Pacific.