A “MASSIVE” uplift in announced mergers and acquisition (M&A) activity in 2004 can be attributed more to the size of the deals than the quantity, according to M&A partners at Allens Arthur Robinson and Minter Ellison, both of whom were involved in some of the largest deals.
Recent Australian M&A tables, released by Thomson Financial, reveal that there has been an increase in activity of more than 60 per cent this year to the end of the third quarter. As well, the value of completed transactions increased by more than 55 per cent.
The figures indicate that deals have been getting bigger, according to Allens Arthur Robinson partner Jon Webster. For example, the completed amalgamation of three Westfield entities was the largest deal announced so far this 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. Minter Ellison, Allens Arthur Robinson and Mallesons Stephen Jaques advised on these deals.
There has been a wide variety of deals, according to Webster, but “property trust has been more active”, and Allens had been involved in a number of these deals. He said Lend Lease Corp’s merger with General Property Trust is the third largest of 2004, with rank value of US$6.39 ($8.71) billion.
But, although the size of the deals has been significant this year, according to figures and commentators, the number of deals has dropped 6 per cent compared to the same period last year. The industry total last year was 971 deals, compared with 913 this year.
Despite the good news, Minter Ellison partner James Philips said “it’s not all roses”. The bad news, according to Philips, was that his firm has had to drop a couple of large deals this year because of the current equity market evaluation.
“We’ve been instructed on two transactions in the last months, one several billion and another, but both won’t proceed because of the equity market evaluations of the target companies,” he said.
Webster agreed with Philips’ reasoning and said he was sure there was some substance in this but felt the drop in the number of deals could also be attributed to the recent election.
“This could be why there has not been a huge leap in quantity,” he said. Before an election people become uncertain how a change of government could effect the transaction, he said. “It’s usually quiet before an election because of this uncertainty.”
Macquarie Bank was the top financial adviser in both announced and completed deals in Australia, according to Thomson Financial figures. The bank advised on 39 announced deals and 38 completed deals valued at US$37.33 ($41.89) billion and US$30.73 ($50.89) billion, respectively.