Takeover bids are increasing in number and are moving faster, a new report into the Australian market reveals.
A new M&A report released today by Gilbert + Tobin shows that despite claims that schemes of arrangement are more popular, takeover bids comprised 52 per cent of all $50 million-plus transactions of 2011.
This is up from 45 per cent in 2010. For higher value transactions of over $1 billion, this figure increases to 57 per cent. The figures include takeover bids for Equinox Minerals, Macarthur Coal and Minara Resources.
“It seems then that the takeover bid is back,” the new report, Takeovers and Scheme Review 2012, states. This is particularly true in mining, resources and energy.
“Given share prices are still general down, target boards may be reluctant to engage on schemes at historically low prices. Takeover bids being made direct to shareholders can take target boards out of the equation and force the issue,” said Gilbert + Tobin Melbourne partner Neil Pathak.
Takeover bids also moved faster in 2011, according to the report.
Successful bidders proceeded to compulsory acquisition on average within 76 days of announcing the transaction. This was much fast than the previous year, when on average bidders took 103 days to reach the same point.
The Gilbert + Tobin authors say the high proportion of cash bids, which offer certainty of value, and the increase in agreed deals, give shareholders the added comfort of their board’s endorsement to encourage acceptances.