Proactive Investors - Run By Investors For Investors

ASX M&A deal activity set to continue in 2019 after solid 2018

A weaker AUD will make our domestic companies and assets cheaper for offshore buyers.
map of Australia
UBS was Australasia's top ranked M&A dealmaker in 2018 as per Dealogic

Deal value in Australiasia reached US$105.3 billion in 2018, up 16% on 2017.

Q4 generated US$37.1 billion of that and was again the most valuable quarter, as was the case in 2016 and 2017.

The quarter that outperformed the most was Q3 in Australasia at US$35.5 billion.

The top 10 deals in 2018, excluding spin-offs and open market purchases, all featured an ASX company as either the acquirer or target.

Transurban with the biggest deal of the year

Deals by sector were relatively balanced in 2018 with the largest being Transurban Group’s (ASX:TCL) $9.3 billion acquisition of 51% of Sydney Motorway Corp Pty Ltd.

The toll road giant purchased the 51% interest from the New South Wales government.

At #2 was Vodafone’s 100% merger with TPG Telecom Ltd (ASX:TPM), which is being examined by the ACCC.

Commonwealth Bank of Australia’s (ASX:CBA) 87% acquisition of Snowy Hydro Ltd was #3 and the private equity takeover of Healthscope Ltd (ASX:HSO) came in at #4.

Interest rates could make Australia more enticing in 2019

Notably, Australasia’s 2018 deal value was higher than that of Japan and Latin America and the state of our domestic economy could well act as a tailwind for deals continuing.

As already discussed, Australia is not expecting interest rates to rise, which depreciates our currency, especially against currencies from countries like the US who are raising interest rates.

READ: Keeping an eye on housing and interest rates in 2019

A lower AUD makes Australia’s domestic assets cheaper for overseas buyers.

Furthermore, given we are a developed country, our assets and companies are considered lower risk, adding another reason for increased M&A in 2019.

UBS, Goldman, Macquarie still at the top

UBS, Goldman Sachs, and Macquarie Group Ltd (ASX:MQG) remained the top dealmakers in Australasia in 2018.

JPMorgan, which regularly features in the top US rankings, lost the most ground compared to last year, coming in 10th.

READ: Gold sector sees M&A consolidation on ASX ahead of 2019 price uncertainty

With volatility creeping back into global markets in the December quarter of 2018, gold has been stronger.

Australia once again gets a tailwind from our weaker currency, for example, the gold price is US1,296 per ounce, which equates to A1,848 per ounce.

According to PCF Capital Group, by the first week of December there had been 45 major gold asset transactions on the ASX for a total value of $2.3 billion, with 23 of these yet to be completed.

This is up from 40 transactions in 2017 which totalled $3.1 billion.

Exploration transactions were up on 2017, with 23 transactions in 2018 compared to 16 the previous year.

View full . profile View Profile

Proactive Investors Australia Timeline

Related Articles

March 04 2019
At the Completion Contract business there have been lower volumes and the average budget per film has reduced
Live Company
June 13 2019
In June 2019 the company signed a five-year deal to create tours themed around properties owned by children’s television network Nickelodeon
Augmented Reality on phone
March 22 2019
The firm currently has around nine companies in its portfolio that are either direct investments or through its sub-fund, Suir Valley Ventures, in which it holds a 22% stake

© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use