FOREIGN investors were involved in all seven of the Australian-based public takeovers and schemes of arrangement over $1 billion, which were announced in the last financial year.
The revelations come in new report, the 2009 Public Mergers & Acquisitions Report, released by law firm Freehills. The report investigates the trends coming out of the 72 takeovers and schemes of arrangements involving ASX listed companies announced during financial year 2009.
"Despite Australian companies raising a record $90 billion in financial year 2009, they have not yet launched the big deals, which have been driven by foreign bidders," Freehills’ corporate M&A partner, Simon Reed said.
"We are likely to see more Australian bidder involvement in the current financial year, now that they have secured their balance sheets and equity markets confidence returns," Reed said.
According to the Freehills report, the biggest public M&A deals involved overseas investors spread across China, Japan, US, Canada and the UK, and of these, the resources sectors accounted for four of the top seven transactions.
"The resources sector continues to underpin the action in Australian M&A, with overseas investment accounting for the biggest deals. The unprecedented turmoil in the financial and capital markets certainly hasn’t killed off M&A activity, but it has had an impact on the way these deals are done," Reed said.
The Freehills report on public transactions conducted via takeovers or schemes of arrangement, aims to provide insights into the structure and key terms of transactions.
The report uncovers some inter-relations between the deal structure and deal mechanics used and the potential impacts on success, the firm said.
According to the report, despite the scarcity of available credit, almost half of the offers were still for cash or had a cash alternative. It also found that Australian market participants are becoming more comfortable with schemes as a deal structure, but takeovers continue to account for more than two thirds of announced deals.
In a landscape of less competitive auctions for control, break fees were resisted in the majority of recommended transactions, the report found.
According to the report, regulator involvement is on the rise, with foreign investment approval becoming a closely scrutinised and critical element in Australian M&A.