- The Herbert Smith Freehills 2015 Australian Public M&A Report will be released on 1 October.
- The Report examines the 55 public takeovers and schemes involving ASX-listed companies that were announced in FY2015.
- Now in its seventh year, the Report gives readers an insight into how the trends, structure and conditions of Australian public M&A have evolved over a number of years, and provides an indication of where activity may be heading in years to come.
2015 Australian Public M&A Report
There were 55 deals announced in FY2015, down from 77 in FY2014 and at an all-time low in the 7 years that we have produced this Report.
However, total deal value remained solid at $28 billion, primarily as a result of 7 mega deals (ie valuing the target in excess of $1 billion). These were across a range of sectors and in total accounted for $22 billion in value.
The Report’s key findings include the following:
- Deals accounting for 84% of overall value were announced in the second half of FY2015, including all of the mega deals.
- The energy and resources sectors continued to provide a baseload of activity in the Australian public M&A market, accounting for 60% of transactions by number, though deal values were down.
- Schemes of arrangement featured prominently, particularly in the mega deals category, where 6 out of the 7 mega deals were structured as schemes.
- Only 2 targets were the subject of multiple bidders. This drop in competition was accompanied by high success rates at 70% overall and almost 90% in friendly deals.
- Target shareholders were particularly receptive to cash consideration, with 75% of transactions offering cash only being successful, compared to 54% for scrip only transactions. The use of private debt to fund cash consideration rose to 34%, a considerable increase from both FY2013 and FY2014.
- In FY2015 there was an increase in the proportion of deals with premia in the 20-40% range and reduction in the above 40% range. Premia size had a strong positive correlation with success rates, which has not often been the case in previous years.
- An increased proportion of transactions included a break fee of more than 1%.
Although the high level of global M&A in FY2015 did not translate to similar activity levels in Australia, conditions appear favourable for an increase in Australian M&A activity in FY2016, with a number of significant transactions having already been announced in the first quarter.