by
Simon Reed, Partner, Perth
Looking back at the public M&A activity in the last 6 months, the mining and energy sectors clearly stand out accounting for almost half of all deals.
But
what does this all mean? What do numbers and stats really tell
us?
Well,
they tell us that even though total deal numbers are slightly down on previous
years (57 public M&A deals announced, compared to 75 deals in the same
period in FY2011), energy and resources is still dominant. They tell us that
there’s been significant activity at the upper end of the market, where in the
mining sector 35% of transactions exceeded $500 million in value (this is even
higher in the energy sector – which includes coal plays – where 60% of the deals
announced related to targets of $500 million or more in value). Some notable
deals were the bids for Anvil Mining and Sundance Resources as well as the
proposed merger of Aston Resources and Whitehaven
Coal.
They
tell us that Western Australia continues to play a key role in the public
M&A activity, with the majority of targeted companies having projects either
in Western Australia or Africa. Of the 17 resources deals announced in the first
half of FY2012, 53% had primary assets located in Western Australia. 35% of
those targets had assets located in Africa – a trend we expect to see
grow.
They
also show us a couple of interesting trends that have emerged in how mining
M&A is being executed: the strong preference in the resources sector is to
undertake friendly deals with target board support. 70% of resources deals have
been launched with target board support – contrast this to the energy sector,
where the vast majority of transactions have been initiated as hostile
deals.
Finally, against a backdrop of stronger preferences for
cash consideration in public M&A generally, the resources sector continues
to show an appetite for scrip consideration, with resources deals being launched
with an equal preference for scrip or cash.
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