Major M&A set for record-breaking year

Mega M&A deals are set to continue, leading to a record-breaking M&A year, a new report has found.

A quarterly report by Allen & Overy has found that despite a low number of transactions globally, this year is likely to be one of the strongest years since the GFC.

According to data from Mergermarket, M&A values rose by 19% ($1.047tn) in UK Q3 when compared with last year.

Australia ranked in the global top 20 with the help of Federation Centre’s merger with Novion Property Group at $7.8 billion and Japan Post's acquisition of Toll at $6.5 billion. 

Geoff Simpson, partner at Allen & Overy, told Australasian Lawyer the trend looks to continue with significant mega deals already announced for the second half of this year, including Vocus and M2’s $3bn merger and Equifax’s recommended A$2.5bn bid for Veda.

Simpson said that the fall in the Australian dollar combined with favourable financing is likely to continue to attract foreign bidders.
“We expect a continued focus on strategic growth through M&A in financial services and property,” he said.

“These market conditions, combined with lower valuations on account of basement commodity prices, will mean resources M&A will potentially pick up considerably.”

Regionally, the Asia-Pac region saw lower M&A activity over UK Quarter 3, with Australia managing to maintain its regional position.

“There would appear to be no abating in the resurgence in oil & gas M&A, with Woodside’s recent $A11.6bn tilt for OilSearch and Santos’ assets the subject of continual rumourtrage,” Simpson said.

“Resources M&A will also likely move forward on account of a number of large assets becoming available – including potentially Glencore’s Cobar mine.”

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