Thomson Reuters Australia M&A Preliminary Financial Advisory

Thomson Reuters Australia M&A Preliminary Financial Advisory Review

Australia M&A Recovers in 2Q 2012

Australia’s overall M&A activity witnessed an uptick with 394 deals worth US$24.4 billion announced in the second quarter of 2012, a 17.4% sequential increase from the previous quarter, after suffering its third consecutive quarterly decline in 1Q 2012. Despite the improvement, the US$45.1 billion-worth of announced M&A deals so far this year represented a 54.1% drop from the first half of 2011. The average deal size for disclosed deals involving Australian firms went down to US$99 million compared to US$178 million in the first half of 2011, as deal activity in Australia witnessed fewer transactions above US$3.0 billion thus far. Total cross-border transactions fell 45.1% to US$25.2 billion from the first half of 2011 (US$45.9 billion), pulled by the 79.2% drop in outbound activity. Inbound M&A declined 33.1% to US$22.7 billion so far this year compared to the start of 2011, despite the 132% growth in deal value during the second quarter of 2012 to US$15.9 billion from US$6.8 billion in 1Q 2012. Domestic M&A activity, now in its fourth consecutive quarterly decline, dropped 70.8% to US$10.7 billion so far this year from US36.9 billion during the first half of 2011

Energy & Power and Materials Capture 50% Combined Market Share

Energy & Power was the leading target sector for Australia M&A this year despite a 5.7% drop in volume to US$11.6 billion compared with 1H 2011 (US$12.3 billion), accounting for 25.7% of the M&A activity. Deal value in the Oil & Gas sector was down 32.4% to US$5.9 billion from 1H 2011 (US$8.7 billion). Meanwhile, the Materials sector saw its third consecutive quarterly decline as deal value amounted to US$3.2 billion in 2Q 2012, down 58.1% from the previous quarter, bringing this year’s total to US$10.9 billion. Despite the 45.9% decrease in deal value compared to the start of 2011, Materials sector captured 24.1% of Australia’s M&A activity. Metals & Mining, which accounted for 91% of the Materials industry, dropped 50% to US$9.8 billion from the comparable period last year.

Private Equity-backed M&A Improves in 2Q 2012

The triple-digit percentage increase (420%) in deal value during the second quarter of this year to US$2.2 billion, coming from a low 1Q 2012 volume, was not enough to push Australia’s private equity-backed M&A activity back up. The value of PE-backed M&A in Australia this year totaled US$2.6 billion, down 53% from the first half of 2011. Nonetheless, Australia accounted for 29.9% of Asia Pacific’s PE-backed M&A this year worth US$8.9 billion, while China captured 26.1%.

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