Foreign investors have dominated the Australian M&A sector in 2009, being involved in all seven of the billion-dollar-plus public takeovers and schemes of arrangement (SOAs) seen over the last financial year. According to a Freehills report, the resources sector was the most active, accounting for four of the top seven transactions. The biggest public M&A deals involved overseas investors from China, Japan, the US, Canada and the UK.

“The resources sector continues to underpin the action in Australian M&A, with overseas investment accounting for the biggest deals,” said Freehills’ Perth corporate M&A partner, Simon Reed. “The unprecedented turmoil in the financial and capital markets certainly hasn’t killed off M&A activity, but it has had an impact on the way these deals are done.”

Australian companies raised a record A$90bn in FY09 but have been hesitant to persue large takeover deals, with cashed-up investors from overseas making the most of the opportunities to purchase quality assets cheaply. However, Reed believes it is only a matter of time before the Australian companies get back into the market: “We are likely to see more Australian bidder involvement in the current financial year, now that they have secured their balance sheets and equity markets confidence returns,” he said.

The Freehills report found that almost half of the offers were cash-based, or included a cash alternative, despite the scarcity of available credit. It also showed that bidders had become more cautious in their approach, with fewer unconditional bids launched.

Legal advisors to Australasian M&A – 2009 values