In its 2014 Australian Public M&A Report, Herbert Smith Freehills found M&A activity experienced a “significant boost” in the previous financial year with the return of mega deals, a jump in deal number and total deal value.
“The total value of mega deals returned to a healthy level of almost $38 billion – a strong improvement on the previous year’s figure of just under $5 billion,” the report said.
“Overall, the total number of deals announced in [the 2014 financial year] surged by more than a third on the previous financial year to 77 deals,” it said.
“Private equity participation remained relatively stable in terms of the overall proportion of deals – up from eight deals last year to 10 deals in [the 2014 financial year],” the report said.
The report also pointed out that ASIC’s amendments to its guidance on joint bids have led to a notable number of companies joining together to acquire a company – such as Dexus and Canada Pension Plan’s bid for Commonwealth Property Office Fund.
“The growing propensity for bidders to find strategic partners, in order to attain collectively what may be unachievable on a stand-alone basis, gives further encouragement for increased activity levels going forward,” the report said.
The report also found a “dramatic increase” in competitive scenarios, which Herbert Smith Freehills said was beneficial for achieving a higher outcome.
“Renewed competition in [the 2014 financial year] has proven very beneficial for targets, with the average final outcome in competitive scenarios representing a 40 per cent increase on the initial price offered,” Herbert Smith Freehills partner Simon Reed said.
