WA drives M&A uptick
THE WA mining sector is leading the charge in the merger market on the back of increased foreign interest in a range of commodities. According to Mergemarket’s 2017
Australia M&A report, Energy, Mining and Utilities (EMU) has taken over Transportation as the most targeted merger and acquisitions ( M&A) sector, with 77 deals worth a total $37.1 billion made during 2017– a 56.7 per cent increase on 2016 figures.
Australia, and in particular WA, is poised for further increases in 2018 for deals in the tech metals sector, as the Federal and State Governments open doors to capitalise on growing global demand.
Electric vehicles, stricter environmental emissions legislation, and household-use solar power batteries are driving demand for commodities such as lithium, cobalt, boron, vanadium, copper, and nickel.
Mergemarket said WA in particular would again expected to be the engine room of such mining deals, as well as initial public offerings (IPO).
Improvements in processes at Australia’s Foreign Investment Review Board (FIRB), will allow for more strategic acquisitions from foreign companies, particularly from countries such as China.
That trend is already being witnessed, with a 141.5 per cent increase in Australia’s inbound M&A value ($80.5bn) compared to 2016, and a 27 per cent decrease in outbound M&A value ($24.7bn) compared to 2016.
The total value of Australia’s M&A in 2017 was $113bn.
A consortium led by Cheung Kong Property to acquire Duet Group was the top deal for the EMU sector with a value of $13.1bn.
That deal, along with two other deals in the EMU sector comprised three of the top five deals last year.