The Australian M&A market grew by 20 per cent in 2014, reaching its highest full-year total since 2011, according to Herbert Smith Freehills.
The corporate law firm said the market has enjoyed a “robust year” in 2014 with M&A activity reaching a total of US$119.8 billion.
Referencing research conducted by Thomson Reuters, Herbert Smith Freehills said 2014 saw 30 “mega deals” valued at over one billion US dollars, compared to only 16 deals in 2013.
“Interestingly, 10 out of these 30 buyers were Australian, reflecting the significant strength of the market,” a statement from Herbert Smith Freehills said.
Herbert Smith Freehills partner Simon Haddy said heading into 2015 there is a positive outlook for the Australian M&A market.
“The fundamentals for a robust M&A market, such as the availability of debt and equity capital, are still in place and the strong performance of both M&A and equity capital markets in 2014 has delivered a renewed confidence,” Mr Haddy said.
“Inbound activity is likely to remain healthy in 2015 with the falling Australian dollar, lower commodity prices and several new free trade agreements bolstering the country’s appeal to foreign bidders.”
“Outbound activity also looks promising. In order to continue delivering on their growth plans in 2015, a lot of Australian companies will look for new sources of expansion that are not available domestically,” he said.
Looking at the market from a sector perspective, Mr Haddy said the infrastructure and resources sectors look promising.
“A significant number of state infrastructure privatisation programs announced in 2014 will go to market in 2015, delivering a robust deal pipeline, including a number of mega deals,” Mr Haddy said.
“Resources will also be a hot sector in 2015 as a result of falling commodity prices.”
“We expect there to be strategic consolidation within Australian oil and gas and mining companies, which are likely to attract an increase in takeover bids particularly from foreign investors,” he said.