Norton Rose Fulbright’s Australian Public M&A deal trends report analysed deals with a value of at least $50 million announced during the calendar of 2020 – and found that M&A deals in Australia remained consistently strong through the pandemic in 2020. 77 per cent of deals succeeded compared to a 79 per cent success rate in 2019. 2020 also saw significantly more hostile and aggressive takeovers than the previous year. 

In March 2020, 18 months after global markets dropped dramatically, deal-making in Australia was slow-moving, but after a “strong rally” from June onwards, 2020 saw similar deal numbers to previous years. 40 deals were announced in 2020, as opposed to 42 in 2019.

“In summarising the 40 takeovers and schemes announced to market during 2020 with a deal value of at least $50 million, this report considers how the Australian public M&A market has fared during what has been a remarkable 12 months and attempts to forecast (rather cautiously) what the coming year may bring, as we see a steady return to deal maker confidence,” the report states.

Of the 40 deals announced in 2020, 20 per cent were “hostile” unsolicited bids, a surge from 2019 where only two per cent of the 42 deals were hostile, the report showed. Conversely, “friendly” schemes of arrangements dropped from 83 per cent in 2019 to 55 per cent in 2020, although it remained the preferred structure for all four $1 billion-plus mega deals of 2020.

The total deal value of all surveyed deals rose from $28.2 billion in 2019 to $30.4 billion in 2020, although the report notes that a single M&A deal – the Coca-Cola European Partners plc’s scheme of arrangement acquisition of Coca-Cola Amatil Ltd – is responsible for $9.6 billion. In 2021 so far, the analysis showed a rise in schemes of arrangements with this M&A method returning to popularity.

Norton Rose Fulbright corporate M&A partner Jeremy Wickens said that 2021 would see M&A continue to stand firm, as it did in 2020.

“2020 was a year of resilience for M&A and we are seeing history repeat itself this year. The 2020 year began with an all-time low for deals, but saw an incredible turnaround from June onwards marking a steady return to deal maker confidence,” he said.

VIEW ALL

“This boom has continued into 2021, as we’ve seen a huge lift in M&A activity as a result of market highs, strong profit results leading to higher appetites for investment and greater interest from private equity.

“While opportunism drove a rise in hostile bids in 2020, the strong market outlook is driving a wholly different dynamic in M&A in 2021 which shows no signs of slowing down,” Mr Wickens added.

The report also found the software and services industry accelerated into one of the top four industries making deals in 2020, especially among companies in the e-commerce space. The technology sector continues to benefit from COVID-19 with strong M&A activity in this sector throughout 2021 with Australian Afterpay shareholders set to be the primary beneficiaries of this tech boom after implementation of the largest ever corporate takeover deal, as previously reported by Lawyers Weekly. However, other industries including tourism, international education, and hospitality are yet to recover.

The metals and mining sector remained strong in 2020, topping the industries list at one in four deals for 2020. Foreign investment also stayed consistently strong, with half the deal bidders being overseas. According to the report, The Foreign Investment Review Board’s temporary $0 monetary threshold in response to COVID-19 did not adversely affect foreign investment in Australia as some market commentators expressed.