M&A activity reaches highest level in 7 years

A total of 49 transactions valued over $50 million were announced in Australia in 2018, representing a 19.5 per cent increase from 2017, Gilbert + Tobin’s latest Takeovers + Schemes Review showed. 

The story is similarly positive when measured by transaction value: the total value of transactions over $50 million in 2018 was approximately $48.7 billion, compared with $41.6 billion in 2017. 

"With continued activity in sectors including professional services and healthcare, and a number of private equity firms seeking to deploy capital, we are hopeful that 2019 will have similar or better activity levels," Gilbert + Tobin said. 

Private firm KKR’s acquisition of MYOB ranked fifth by value and stood at $2.01 billion.

Despite increased scrutiny of foreign investment, foreign interest in Australian listed companies remained strong in 2018. Fifty-nine per cent of all transactions valued over $50 million in 2018 were made by a foreign bidder, led by acquirers from North America and Asia. There was, however, a decrease in the activity of Chinese bidders, Gilbert + Tobin said. 

On average, the review revealed, foreign bidders were involved in significantly larger transactions than their domestic counterparts. 

"We expect that foreign bidder interest will continue to be a key driver of transactions in this market in 2019," Gilbert + Tobin noted. 

That said, with the 2019 election expected in May, the firm judged that Foreign Investment Review Board (FIRB) approvals may see a temporary slowdown in the second quarter of the year, as the government enters into caretaker mode.

"Foreign transactions involving companies and assets holding sensitive or significant amounts of data (including in the healthcare sector) will be an area of focus for the government and FIRB in 2019. We also expect to see continued scrutiny of Chinese investment,"  Gilbert + Tobin concluded.