Mergers and acquisitions and IPOs were almost mirror images of each other in their value and number respectively for 2004, according to two recent surveys.
While the number of M&As will only grow slightly compared to last year, their total value grew by 40 per cent according to KPMG.
For IPOs, the number of floats is predicted by PricewaterhouseCoopers (PwC) to be more than double that of 2003, but their total value will be about the same for the two calendar years.
Based on data compiled by Thomson Financial, KPMG’s corporate finance practice said the overall number of deals for 2004 to the end of November grew by only 6 per cent compared to the same period last year. The total value of M&A deals with Australian target companies to 30 November, however, rose from $44 billion to more than $61 billion.
KPMG corporate finance partner Robert Bazzani said the biggest change was in the $500 million to $1 billion range. He nominated property, energy and gaming as the most active categories this year.
Minter Ellison, Allens Arthur Robinson and Mallesons Stephen Jaques all acted in the $20 billion-plus amalgamation of the Westfield Group, the biggest M&A of the year. Westfield America Trust and Westfield Trust were valued at US$10.47 ($14.26) billion and US$9.69 ($13.21) billion, respectively, in their union with Westfield Holdings.
Freehills acted for Great Energy Alliance Corporation Pty Ltd in its long-running acquisition of Loy Yang Power, which owns and operates the Loy Yang A power station and coal mine for a price of $3.5 billion.
Early in the year, Minter Ellison advised Singapore Power on its acquisition of TXU Corporation’s Australian energy assets.
Blake Dawson Waldron advised WA-based Alinta on a series of major acquisitions, including Duke Energy’s Asia-Pacific assets at a price of $1.69 billion, the rest of Aquila Inc’s assets in Australia and recently Alinta’s part in the purchase of the Dampier to Bunbury Natural Gas Pipeline for $1.86 billion.
Clayton Utz acted for the financiers of Epic Energy when it bought the pipeline in 1998. The law firm later also acted as legal adviser to the receivers and managers of the pipeline when it was sold this year to the Alinta/Alcoa/Diversified Utility and Energy Trusts consortium. The law firm also acted for Australian listed company Origin Energy in its acquisition of a 51 per cent interest in Contact Energy from Edison Energy for approx $1.5 billion. Contact is one of the largest energy companies in NZ.
Meanwhile, PwC’s Annual Survey of Sharemarket Floats predicts there will be a total of about 100 floats by the end of the year. The 79 completed IPO’s to 30 November raised a total of $5.7 billion. The final 20 are expected to raise around $1.1 billion.
Greg Keys, corporate finance partner at PwC said as in prior years, the majority of IPOs for 2004 had market capitalisations of less than $100 million, with only 15 per cent above that figure.
“Despite the large increase in floats in 2004, the total capital raised is expected to be similar to the $6.6 billion raised last year,” he said.
Freehills acted in the biggest IPO for the year, the $1.25 billion listing in April of Pacific Brands on the Australian and NZ stock exchanges. Mallesons Stephen Jaques, led by partner Richard Hoskings, acted in the $1.1 billion IPO of ConnectEast Group last month. It closed oversubscribed on 4 November.
Baker & McKenzie advised global investment bank Babcock & Brown on the year’s third largest IPO.
The 110 million shares were listed at $5 a share on 6 October to raise $550 million, implying a full market capitalisation for Babcock & Brown of $1.6 billion.
Among the more high-profile work, Clayton Utz is advising the Medical Research and Compensation Foundation in its efforts to secure further funding for asbestos victims from the James Hardie Group. The law firm is also advising the Sharman entities in the present copyright infringement proceedings involving allegations of a breach of the Copyright Act 1968 brought about by the download of mp3 or other digital files from the internet.
Other high-profile cases included Phillips Fox’s representation of Aristocrat against its former CEO, which established that the company could terminate a CEO contract without notice.
Bazzani said one of the most “exciting” M&As was Woolworth’s joint-venture purchase of Australian Leisure & Hospitality (ALH) for considerably more than Fosters received when it spun off ALH last year.