Australian M&A Heats Up in Busy New Year for Dealmakers

Harry Brumpton

(Bloomberg) -- It’s been a busy New Year for Australian dealmaking, with mergers and acquisitions activity heating up just after bankers returned from their Christmas holidays.

Australian companies have already announced A$930 million ($640 million) of transactions this year, up 58% from the same period in 2019. That’s not counting the latest purchase by Macquarie Group Ltd.’s infrastructure arm, which signed a deal last week to take over A$3 billion data center operator AirTrunk, Bloomberg News has reported.

The AirTrunk deal, when officially unveiled, could make this the busiest first half of January in at least three years, according to data compiled by Bloomberg. In 2019, it wasn’t until the end of January that Healthscope Ltd. announced the year’s first big transaction with its A$4.4 billion sale to Brookfield Asset Management Inc.

Buyout firms have a lot of cash to deploy, which could also keep the dealmaking momentum in Australia strong this year, according to Nick Brown, a Sydney-based managing director at UBS Group AG.

“Private equity and superannuation funds continue to chase any assets which have defensive or infrastructure-like characteristics,” Brown said in a phone interview. “Valuations are high and capital is available. You put those things together and that makes for conducive M&A conditions.”

More deals are in the pipeline. Last week, A$8.9 billion fuel station operator Caltex Australia Ltd. confirmed a Bloomberg News report it had received interest from the U.K.’s EG Group.

That could set up a takeover battle with Canadian convenience-store giant Alimentation Couche-Tard Inc., which is considering its next move after Caltex rejected an earlier offer. Any sale of Caltex would be the biggest foreign acquisition of a listed Australian company in more than two years.

More major dealmaking is currently afoot that could boost the busy start further yet. Final bids were slated to be due for credit checking company Illion that could be worth as much as A$1.2 billion, while educational resources company Modern Star has asked for fresh bids that could value it at as much as A$750 million, the Australian Financial Review has reported.

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--With assistance from Angus Whitley and Amy Thomson.

To contact the reporter on this story: Harry Brumpton in Sydney at hbrumpton@bloomberg.net

To contact the editors responsible for this story: Fion Li at fli59@bloomberg.net, Ben Scent

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