Gilbert + Tobin’s latest Takeovers + Schemes Review, an analysis of public M&A transactions in 2018 valued over $50 million, showed a 19.5 per cent increase in transactions from the year before, representing the highest M&A activity in Australia in the last seven years.
The total value of the 49 transactions over $50 million in 2018 was approximately $48.7 billion, compared to $41.6 billion in 2017.
Private equity firm KKR’s acquisition of MYOB ranked as the fifth largest deal in the year at $2.01 billion, with professional services one of the key sectors contributing to the increase in 2018.
“Despite regulatory headwinds, 2018 saw a distinct increase in activity for public M&A in Australia,” said Gilbert + Tobin’s co-head of corporate/M&A, Neil Pathak.
“There was a significant improvement in success rates, perhaps due to the sharp uptick in premiums paid. Cashed-up private equity firms were highly acquisitive, willing to deploy approximately $13.6 billion on targets in a range of sectors.
“Interest from foreign bidders, especially from North America and Asia, was robust, with foreign transactions being substantially larger than domestic transactions.”
Despite increased scrutiny of foreign investment, foreign interest in Australian listed companies remained strong in 2018, with 50 per cent of all transactions made by a foreign bidder.
However, with the federal election set for next month, Mr Pathak expects FIRB approvals to slow down in the second quarter.
Foreign transactions involving companies and assets holding sensitive or significant amounts of data will also be an area of focus for the government and FIRB in 2019.
Further, as a result of the banking royal commission, bidders can expect the corporate regulators to adopt a more proactive and aggressive approach in 2019.
“The financial services royal commission galvanised public scrutiny of large corporates and will embolden regulators including ASIC and the ACCC to more proactively and aggressively scrutinise corporate activity in the coming years,” Mr Pathak said.