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M&A on the upswing: money back on the table?
MERGERS and acquisitions (M&A) trended up in Australia in 2013, both in value and activity, capped off by the final big deal of the year: Scentre Group’s merger with Westfield Retail Trust for $11.9 billion in December.
Australia’s M&A activity in 2013 added up to$ 73.1 billion worth of deals in a 66.5 percent increase on 2012’s $43.9b, according to the latest report by global M&A reporting group Mergermarket, a division of the Financial Times. Mergermarket tracked an extra 22 deals, with 445 reported Australian deals in 2013 over 423 in 2012.
Significant in the mix is the growth of private equity buyouts, which have steadily grown over the past four years.
This activity peaked in 2013, according to Mergermarket research, with a 16.9 percent share of the country’s total M&A compared with 12.5 percent in 2012.
Private equity buyouts valued at $12.4b reached the highest value since 2007’s $22.6b and more the doubled the value in 2012 ($5.5bn) with a 125.5 percent increase.
Last year included two of the highest valued quarters in private equity activity since 2007. After the rise in Q2 to $5.5b in deals, a dip followed with buyouts worth $0.5b in Q3 but Q4 increased over four times the previous quarter to $4.8b.
After an absence of any transport sector buyouts in 2012 two deals targeting transport groups during 2013 amounted to $6.1b, accounting for a dominant 49.1 percent of buyout activity. A consortium led by NSW Ports won the auction of Port Botany for $4.3b which became the top buyout deal of 2013.
The other big one in the sector was the acquisition of 26.7 percent of the Port of Brisbane by Caisse de Depot at Placement du Quebec from Global Infrastructure Partners, which was valued at about $1 billion.
Another significant one was NSW Ports Consortium again, who wrested Port Kembla Pty Ltd from the NSW Government for about $760b.
Canadian investment was prominent again in the 85.08 percent stake in the Commonwealth Property Office Fund by Canada Pension Plan Investment Board and Dexus Property Group for $3.37b.
Another high profile private equity buyout in 2013 was TPG Capital LP’s takeover of poultry farmer and manufacturer Ingham Enterprise Ltd for around $1b.
Energy, mining and utilities continued to dominate the Australian M&A market overall in 2013.
Despite a drop in market share from 44.2 to 28.8 percent, the sector’s value increased 8.5 percent from $19.4b in 2012 to $21b in 2013. The financial services sector experienced a higher level of activity by both deal value and the number of deals in 2013 with 34 deals accumulating $10b, more than 10 times the $0.7b in 2012 with eight more deal announcements.
It was a spectacular end to the year, headlined by that $11.9b merger by Scentre Group with Westfield Retail Trust in December. The 22 announced deals in Q4 (matching the 22 deals in Q4 2012) amounted to $34.8b which represented the highest valued quarter targeting an Australian company since Q4 2010 ($43.2b).
Private equity exits followed a similar upward trend with 28 deals valued at $4.3b. The annual total increased 87 percent compared with 2012’s $2.3b but was far from reaching 2011’s $10.5b. Both Q1 and Q4 2013 saw private equity deals worth $1.9b which represented two of the highest quarters since 2011, where every quarter posted deal values above $1.5bn which was only seen in that year and in 2006.
Exits in the industrials and chemicals sector saw $1.3bn-worth of deals rise 232.6 percnt above the $0.3b seen in 2012. The sector had the second highest market share by value at 30.5 percent, up from 13.9 percent in 2012.
There was also been an increase in cross-border activity by value after what Mergermarket described as “a dismal 2012”.
The most notable increase was for inbound deals because there were also 13 more deals in 2013 (195 deals) compared with 2012 (181 deals).
As a result, the $31.6b in transactions increased 24.4 percent from $25.4b in 2012. A static 93 deals in 2013 aggregated $9.8b worth of deals, up 58.1 percent compared with 2012 ($6.2b).
According to Mergermarket, UBS Investment Bank retained its place at the top of the financial advisor league table by value ($30.2b) and also reached first place by deal count after advising on 28 deals, 14 deals more than in 2012 and up 340.5 percent by value.
Herbert Smith Freehills topped the legal advisor league table by value ($36b), representing a 64.1 percent increase compared with 2012.
King & Wood Mallesons rose from second place to the top of legal advisor rankings by deal count with 62 deals amounting $18.7b, five more than in 2012.
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