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To celebrate the festive season, we are bringing to you the very first HSF M&A Advent Calendar. Join us as we recap the last 12 months giving you the best gift of all – the gift of knowledge – one instalment a day until Christmas Day.

For technological reasons beyond the authors control and/or ability, we are presenting the calendar without the traditional little fold-out doors to open each day as you might find on a commercially-manufactured advent calendar. But we think you can still experience the same sense of excitement building towards Christmas Day by simply refraining from reading the entire article all at once. Instead, you can gain a near identical experience to those fold-out doors by reading one entry each day between now and Christmas. To help you, each instalment comes with its own handy date.

If you have children, why not share the excitement by reading an entry a day to them? You can never be too young to develop a love for M&A. We hope that this suggestion will make this a family Christmas to remember.

Let’s get into it. Remember one day at a time for full effect.


13 December 2024: Reverse break fees

A wonderful gift to start the calendar. Reverse break fees have become almost standard in M&A deals during 2024. They increase deal certainty (and who doesn't love that?!). We have seen a steady acceptance that a reverse break fee need not be tied to the 1% break fee cap (and we also saw a couple of special circumstances where targets agreed to, and the courts accepted, target break fees above 1% of equity value too). We are excited to see how high they will go!

14 December 2024: Targeted stub equity

The Millennium scheme approved an offer of stub equity in which small shareholders were ineligible. In that example, everyone was treated as 'small' if they owned less than $345,000 worth of shares. While we may not see this on next year’s advent calendar, this scheme raised a possibility that there may be some deals where a broader set of shareholders can be excluded from a stub equity offer without creating separate classes.

15 December 2024: Takeovers preferred in dual structures

Dual structures to enhance deal certainty continue to be de jour, but, in a delightful twist, takeovers came to the fore in 2024 as the preferred structure in some cases. The theory is that, if the bidder gets to compulsory acquisition before the scheme meeting is held, they would drop the scheme. Another useful development in the great Takeover renaissance of recent years.

16 December 2024: Merger reforms enacted

No analogy to the grinch who stole Christmas, but Parliament has now enacted the merger clearance reforms. Mandatory notification to start from 1 January 2026, with a phase-in voluntary notification period from 1 July 2025. Bidders will need to carefully plan their execution strategy, particularly having regard to bolt-on or roll-up strategies that will be subject to a three year look-back period for thresholds and effect on competition.

17 December 2024: Beneficial ownership disclosure reform

Treasury consultation is underway on proposed changes to extend the definition of relevant interest to equity derivatives. The proposed reforms are designed to prevent participants from stuffing their Christmas stocking with economic interests in listed targets without substantial holding disclosure, but it also counts them for the 20% rule. The wise men and women at HSF say that the Takeovers Panel Guidance Note 20 on equity derivatives deals with these matters suitably, and the proposed reforms complicate concepts well understood by the market. We will no doubt know where this ends up before Christmas 2025.

18 December 2024: Minority take-outs

2024 saw a huge increase in the number of major shareholders bidding for the remaining shares in a target company. Think Boral, Pact, Adbri, Best & Less and APM, to name a few. Usually involving a takeover bid (not a scheme), these transactions often began without target company support as the major shareholders chased the benefits of 100% ownership.


 

19 December 2024: Standstills stand still

In 2024, some reindeers were prevented from taking flight. The year was marked by a series of transactions where bidders tried to get out of standstill commitments they had given previously. One bidder managed to achieve this with some help from HSF by going to the Takeovers Panel (Diatreme’s bid for Metallica). The Panel said enough was enough as the target had not given the bidder any information. But otherwise, standstills have stood still.
 

20 December 2024: A busy Takeovers Panel

Busier than the elves at Santa's workshop, the Panel has received 26 applications for declarations of unacceptable circumstances or reviews of decisions this year (so far). On our maths, that is approximately one every fortnight. However, there were long time gaps between applications being made until, for some unexplained reason in April and May, ten applications came within the space of a few weeks! The Panel did a great job dealing with the issues. And still had time to publish a new rule cracking down on applicants who lack standing to make an application.

21 December 2024: Truth in takeovers

Truth in takeovers was in the news this year after SGH sweetened its bid for Boral. It had said the offer consideration was ‘best and final’ and that it would increase the cash component of the offer if it reached 80% or 90%. But that didn’t mean it would not increase at lower levels of acceptance, which it then did. Words matter in takeovers and SGH’s bid (on which HSF advised) was successful. A reminder that Santa is watching so you better make sure you are on the right side of his list!

 

22 December 2024: Backdoor listing deals

Some listed companies were packed like Santa’s sack in 2024. The Chemist Warehouse/Sigma deal announced in late 2023 spurred on a few other transactions where an unlisted business was sold into a listed company with the seller ending up with a large or controlling stake in the listed company. In CH2/Paragon Care, the private company sellers ended up with 57% of Paragon and, in Original Juice’s acquisitions of SPC and Nature One (still pending at the time of this note), the sellers of the two businesses would end up with 69% and 15% respectively of the enlarged group. HSF advised Chemist Warehouse and Paragon.

23 December 2024: Social media in M&A

This year, we saw shareholders come together like Christmas carollers singing from the same song book to spread their message of joy (or otherwise). One development we came across in 2024 was small shareholders using social media (especially Hot Copper chat rooms) to exchange views and co-ordinate responses to corporate action. Hot Copper was running very hot indeed with comments by small shareholders in the bids for Metallica and Pact (and no doubt other bids) arguing the case to reject the bids. The ASIC Chair told us that, in one instance (not one of the bids mentioned), ASIC officers joined the chat to warn that the conversation could mislead shareholders. That led to the chat stopping. But ASIC cannot monitor all comments posted.

24 December 2024: Patience and time

In his masterpiece, War and Peace, Leo Tolstoy remarked that ‘the two most powerful warriors are patience and time’. Leo would have made an excellent takeover adviser because that is the lesson to be gained from a number of long-running transactions in the market over the last 12 months. We are thinking Chemist Warehouse, Pacific Smiles, Namoi Cotton and Azure Minerals. In each case, parties prepared to dig in for the long run have achieved their goals. Patience is a virtue.

 

25 December 2024: The HSF M&A team

You can now unwrap the most precious gift of all - the HSF M&A team! We were on 7 of the 10 largest deals for FY24 so it’s been a busy year. It’s been a privilege to work with our fantastic clients on numerous market-leading and transformational deals this year, and we thank you for the trust you place in us every day. We wish all of our readers a very happy festive season and prosperous 2025. See you then!

 

 


Key contacts

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Rodd Levy

Partner, Melbourne

Rodd Levy
Kam Jamshidi photo

Kam Jamshidi

Partner, Melbourne

Kam Jamshidi
Amelia Morgan photo

Amelia Morgan

Partner, Sydney

Amelia Morgan
Jason Jordan photo

Jason Jordan

Partner, Melbourne

Jason Jordan

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