AUSTRALIAN UPDATE – State of the M&A Nation: 2013 Forecasts
- The article below presents Gilbert + Tobin’s tips and forecasts for M&A in Australia in 2013. The key to successful M&A is simplicity and speed. Acquiring pre-bid stakes outright up front gives bidder a strong strategic advantage. Cash is preferable to scrip consideration. Avoid deal structures which will attract regulatory scrutiny and lengthy approval processes, and obtain a target board recommendation early.
- Shareholder activists will continue to increase their activity. The tip for companies may be to engage early and constructively with them. Often activists and dissenters just want to have their view or opinion heard and taken into account.
- A rebound in the Chinese economy should reignite demand for resources. Expect greater Chinese and other Asian interest in other sectors including infrastructure, agribusiness and companies in the broader industrials section.
- In companies burdened by highly geared structures of yesteryear the equity can be worth little. That is not to say the company doesn’t have a strong business. Under the right financial structure, owners of the debt can take control and make a killing by threatening to kill i.e. threatening to put the company into liquidation or receivership.
- Some of the considered changes to takeover law, such as a “put up or shut up rule”, may inhibit M&A activity by putting more constraints on bidders and frustrated minority shareholders, making it harder to get a successful bid up. Given the difficult financial and economic conditions, it would not help to further regulate bids. There is a real need for bright line rules and guidance on the “Truth in Takeovers” policy.
- M&A in these times may require even greater planning to give acquirers confidence to deal with uncertainty and regulatory red-tape. Regulatory scrutiny appears to be increasingly active.
Read the full article here.