Despite subdued market activity, the first half of 2012 has revealed a number of clear trends that have emerged in public M&A deals as the new financial year gets underway, a Clayton Utz report reveals.
According to The Real Deal 2012 Half-Year Update, published by law firm Clayton Utz, the energy and resources sector and foreign bidders continue to dominate public M&A activity, which is down almost 30 per cent this half compared to the same period in 2011.
Only 22 deals with a transaction value over $50 million were announced in the first six months of this year, compared to 31 deals in the first half of 2011.
Clayton Utz corporate and M&A partner Karen Evans-Cullen said private equity had been active in the public M&A arena, with a number of private equity bear hug approaches to boards in 2012.
2012 has also been marked by increased regulatory focus on fundamental takeover law principles, including the creep rule (under which shareholders can increase their shareholdings above 19 per cent by 3 per cent every 6 months), continuous disclosure obligations, the proper response of boards to bear hug approaches, and truth in takeovers.
"The recent takeover approach to David Jones, for example, has highlighted issues around 'bear hugs', and companies' continuous disclosure obligations," said Corporate / M&A partner Jonathan Algar.
"It has demonstrated that companies need to exercise a considerable degree of caution before announcing approaches that are purely speculative – that is, before engaging in a bear hug by making a takeover approach public, targets need to be sure they are really dealing with a bear and not a sheep in bear's clothing."
See The New Lawyer on Friday for Karen Evans-Cullen’s in-depth article on The Real Deal report.