AUSTRALIAN merger and acquisition activity will continue to be driven by resources this year, a leading M&A lawyer says, as well as financial services, agriculture and property.
Despite the current global economic concerns M&A activity is still strong in Asia Pacific with a cautiously optimistic outlook for 2012, according to law firm Freehills partner Rebecca Maslen-Stannage.
"The shadow cast over global equity markets by concerns in Europe over the past 6 months has not stopped deal flow here. The Thomson Reuters league tables released [5 January 2012] show that Australian M&A activity actually increased in 2011.
"Asia Pacific is seen as a safer investment bet - and a better market in which to sell assets - than Europe at the moment. As long as the debt markets hold reasonably well, we expect to see contiunued activity across a range of sectors in this region over the coming 6 months,’ said Maslen-Stannage.
According to Thomson Reuters M&A league tables for 2011, M&A activity in Australia increased 11.9 per cent to US$173 billion from US$154.7 billion the year before. Cross border activity reached US$86.5 billion, which showed an increase of 9.9 per cent from last year.
"We saw the Australian market perform extremely well in the first half of the year. In fact, M&A activity rose to almost on par with pre GFC levels before concerns about European Debt reined the market in again," said Maslen-Stannage.
Australian companies participated in the following large M&A deals this year: BHP Billiton’s acquisition of Petrohawk (the largest US-based target takeover by an Asia Pacific company on record); Peabody Energy’s joint bid with ArcelorMittal for Macarthur Coal; SABMiller’s takeover of Fosters Group; Centro’s sale of US assets to BRE; and Barrick Gold’s acquisition of Equinox Minerals.
The Freehills partner predicts the Australian market will continue to fare well despite the possibility of challenging economic times ahead.
"Our strong economy and booming resources sector remains an attractive investment destination for global companies. We expect that in 2012 Australian M&A activity will still be largely driven by resources, but also financial services, agriculture, and property," she said.