Australian M&A Activity Drops

Mergers and acquisition (M&A) activity within the Australia and New Zealand region has slowed during 2010, with the values of transactions more than halving this year.

Whilst the number of deals fell to their lowest level in over four years, according to a report authored by Thompson Reuters suggest that the number of deals first approved by company directors and later withdrawn also doubled.

According to the report nearly $45.3 billion in transactions were withdrawn over the last year, the highest level it has ever been in ten years.

The past calendar year, 2009, had the most deals withdrawn (62), compared with 52 so far this year.

The value of deals announced and followed through on so far this year is US$30.8 billion, down 52 per cent from a year earlier and its lowest level since 2006.

The value of M&A transactions for the entire Australiasian region including foreign deals was US$71.3 billion, a decline of 23 per cent from the US$93.1 worth of transactions recorded during the same period in the previous year.

According Anthony Sweetman, head of M&A for UBS, activity had been made up of predominantly cross border transactions, with foreign investment destine for Australia as opposed to overseas investment from domestic corporations.

Many bankers believe that the number of opportunities that occur for Australian companies invest internationally through a merger or an acquisition will only increase, since there has been extensive consolidation already, and the number of domestic opportunities are limited.

“You would expect the foreign investment to continue and, over time, we will see a greater proportion of outbound investment,” Mr. Sweetman said.

Compare Australian Credit Card Deals