Australian dealmakers mostly optimistic about US M&A under Trump 2.0 – Mergermarket
Henslow were recently quoted on the M&A industry. See below the full Mergermarket article providing recent news.
Australian dealmakers mostly optimistic about US M&A under Trump 2.0 – analysis
Outbound deal volume up 42% YTD, reaching USD 7.3bn across 33 deals Australia top APAC target for US investors, despite decreased deal volume Tech, consulting, natural resources, and mining sectors to benefit from US investment Australian dealmakers polled by Mergermarket are mostly optimistic about improved cross-border M&A between Australia and the US, its third largest trading partner in 2023, with outbound deal volume already increasing and with Australia remaining the top APAC target for US investors despite overall deal volume decreasing.
Australian M&A activity in the US increased by 42% year to date (YTD) in 2024 compared to the full year of 2023, reaching USD 7.3bn across 33 deals, according to Mergermarket data. The utility & energy sector in 2024 contributed the most by volume, 42% (USD 3.06bn) of the total.
This includes the ongoing USD 1.98bn acquisition of Dallas, Texas-based IT service management company DataBank Holdings by AustralianSuper and DigitalBridge Group, announced in October. This year marks the highest record since 2020, which saw USD 8.3bn across 61 deals. Australia was the second largest APAC buyer in the US, accounting for 12% of regional investments, trailing Japan’s 68% share.
A weaker Australian dollar relative to the US dollar presents challenges but is partially offset by lower valuations in some US sectors experiencing cyclical downturns such as banking and financial services, non-AI technology, energy, retail, and consumer goods, noted Benjamin Yeo, Managing Director, Investment Banking at Equion Capital.
Despite challenges, the US remains attractive for Australian businesses, with its strong economy, large market, and innovation. Australian firms are well-positioned for US acquisitions where synergies align, he said.
Yeo added that Australian companies see the US as a key market for growth in service industries like technology and consulting, which may sidestep Trump’s proposed import taxes.
Inbound winners
In contrast, M&A into Australia in 2024 YTD, dropped 62%, totaling USD 7.8bn from 80 deals, while M&A into the broader APAC region declined 72%, according to data. Regardless, Australia remains the top APAC target for US investors this year. The tech sector contributed 40% of total M&A volume, accounting for USD 3.1bn across 30 deals. The metal & sheet sector followed closely, contributing 39%, led by the USD 3bn sale of Australian bauxite mining company Alumina [ASX:AWC] to US-based Alcoa Corp [NYSE:AA].
Natural resources and mining are among the sectors set to benefit the most post-election, according to Equion’s Yeo. “Australia’s vast natural resources remain a draw for US energy and mining companies, particularly as global demand for critical minerals grows,” he said. The Australian defence sector is expected to see continued focus, with Andrew Lumsden, Corporate Partner at national Australian law firm Corrs Chambers Westgarth, noting that defence assets, including repurposing dual-purpose assets like drones, could lead to cross-border deals, particularly AUKUS-related transactions with the US.
With Trump’s business-friendly policies and deregulation agenda, US companies are likely to capitalise on new growth opportunities, particularly in sectors where US firms see the strategic value or complementary assets, Yeo noted. The Australian mid-market sector is seen as a big winner. Yeo and Scott McInnes, co-founder of New York-based Oaklins’ Australian member firm Henslow, note that they are being approached by US buyers scouting for opportunities. The weakening Australian dollar against the greenback makes Australian companies, in particular high growth mid-market companies, highly interesting to USD-denominated buyers, agreed Simon B Feiglin, Managing Partner at private equity (PE) firm The Riverside Company. Mid-market sectors likely to thrive, according to Yeo, include technology and software, which “will be targeted by US tech and PE firms looking to acquire innovative solutions and gain regional market access.” Australian medtechs and biotechs are likely to see interest from US firms seeking to bolster their pipelines or enter new markets, while Australia’s strong position in international education could attract US players in expansion efforts, Yeo added.
The energy sector could benefit from investment dollars being diverted Down Under if Trump proceeds with repealing the US Inflation Reduction Act, according to a recent report from the Australian Energy Council. Australian crypto players could attract investment in the wake of expectations that Trump will provide regulatory clarity for the industry in the US, according to Adrian Przelozny, CEO of Australia’s Independent Reserve and Bitcoin.com.au.
by Louise Weihart in Sydney, with analytics by Izaz Ansari (Mergermarket, published 25 November 2024)
