The year ahead: more M&A and an IPO comeback

3 January 2007

The year ahead: more M&A and an IPO comeback

Continued strong buying and selling of New Zealand businesses lies ahead for 2007 but look out for a return to sharemarket listings.

That’s the message from leading M&A legal advisor Brynn Gilbertson, following the release of figures showing 2006 was another strong year for M&A in New Zealand.

Figures just released by Thomson Financial show that global M&A activity reached an all-time high in 2006 and while not as strong as some of the major markets, New Zealand too saw plenty of action.

In its legal advisor tables, the total number of announced deals in New Zealand rose from 310 to 384 in 2006, but the value of them dropped from US$10.6 billion to US$8.7 billion.

Bell Gully advised on 68 completed deals in the Australasian market having a total value of US$11.1 billion. This ranked Bell Gully as the top New Zealand firm on the Australia and New Zealand legal tables and the seventh overall of all firms advising on Australasian deals. It is also the only New Zealand firm to feature in the top 25.

Brynn Gilbertson, head of Bell Gully’s corporate team, says while the level of M&A activity has continued to be strong, what has also been notable in the last year has been the rise in competition for assets.

“The bidding process has become far more competitive, fuelled by the growing number of Australian private equity players looking this side of the Tasman.

“Private equity has shown they’re keen to look across virtually all industries and vendors are responding accordingly but in saying that, the largest completed deals of the year have not been to private equity. We would expect to see continued M&A buoyancy in the year ahead.”

But he also predicts more companies to seek investment for growth through the sharemarket.
“Last year certainly was a lean one for new floats. But with the sharemarket being so strong we expect to see more new listings this year.

“The capital markets are an active and attractive proposition for many sectors and businesses that have yet to realise much of their long-term value. We might well expect to see more public listings in the technology and other growth sectors.”

Listings may also get a boost by the move to make it easier for New Zealand and Australian companies to raise capital across both countries through the new “mutual recognition of securities offerings” regime.

Both governments are set to introduce new regulations that will remove some of the existing barriers to trans-Tasman offerings, such as allowing one prospectus in most cases, rather than the existing two required.

“Indications are that the new regime will be introduced in the first part of 2007. The change is a positive for both sides of the Tasman and we expect it may well attract more offerings.”

Of the top 10 New Zealand deals for 2006, Bell Gully advised on four of the top five being:

- Burns Philp & Co’s acquisition of the 42% of Rank Group it did not already own;

- The sale of Carter Holt Harvey’s forest estate to Hancock Resources Group;

- Waste Management Limited’s amalgamation with Transpacific Industries; and

- Burns Philp’s sale of its Australian Uncle Tobys snacks and cereals business to Nestlé Australia Limited.

ENDS

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