Australia – Strong again

Activity

Australian M&A deal value in 2023 exceeded 2022 levels, despite an approximate 10% decline in deal volume. Strong Australian M&A deal value in 2023 was assisted by a number of mega-deals (deals valued at over A$1 billion), such as Newmont’s A$26.2 billion acquisition of Newcrest. There was also a strong uptick in activity towards the end of the year, including the announcement of Woodside Energy and Santos’ preliminary discussions regarding a potential A$80 billion merger and Mitsubishi UFJ Trust and Banking Corporation’s A$2.2 billion (EV) proposed acquisition of Link Administration Holdings.

Sectors

The energy and resources, mining, consumer and technology sectors dominated Australian public M&A in 2023. Aside from Newmont’s acquisition of Newcrest, this included Chemist Warehouse’s proposed A$8.8 billion merger with Sigma Healthcare, the proposed A$18.7 billion acquisition of Origin Energy by Brookfield and EIG and Blackmores’ A$1.85 billion acquisition by Kirin Holdings.

Legal trends

While schemes of arrangement remain the most favoured deal structure for public M&A transactions in Australia, 2023 saw a resurgence in the use of takeover bids to place pressure on target boards. Competition for highly valued assets also continued, which saw simultaneous dual transaction structures (such as dual scheme of arrangement and takeover transactions) used in a number of deals as bidders sought to neutralise shareholder blocking stakes and get transactions across the line. We discuss the role of shareholders on public M&A in our global M&A report here.

In addition, 2023 was an important year for regulatory reform. Of note are the substantial reforms in relation to Australia’s merger clearance regime proposed by the Competition Taskforce. These have the potential to result in considerable changes to the assessment of mergers by the Australian Competition and Consumer Commission in the future, including the potential for a formal mandatory merger clearance regime (in contrast to the current informal clearance regime) as well as changes to the substantive test for when mergers will be cleared.

Outlook for 2024

We expect 2024 will be a strong year for Australian M&A, building on the momentum from the end of 2023. As bidders adjust to greater certainty on interest rates, private equity and private capital continue to deploy significant amounts of funds, and consolidation takes place in a number of sectors, we expect Australian M&A deal value and volume to remain at high levels.

Meanwhile, regulatory change is likely to be a key theme for 2024, with consultation on the proposed changes to Australia’s merger clearance regime now having closed.

Finally, we predict there will be even more contested deals in 2024 as investors look to deploy capital in high quality and prized assets, particularly in the energy and resources sector and the technology sector.