The Cadia operation. Image: Newcrest Mining
Pitchers Partners has released its Dealmakers: mid-market M&A in Australia 2023 update, where it found that the mining sector contributed significantly to the country’s M&A (mergers and acquisitions) value through the Newmont acquisition of Newcrest.
Pitcher Partners is an association of independent accounting and business advisory firms located in Adelaide, Brisbane, Melbourne, Newcastle, Perth and Sydney.
Its latest dealers M&A (mergers and acquisitions) update found that international corporate buyers accounted for $48 billion of M&A activity in the first half of 2023. As a result, this has delivered the strongest six-month interval for offshore M&A values since 2018.
“Across all markets, foreign interest was led by North American dealmakers who contributed 77 per cent of deal value as they explored opportunities in Australia’s rich technology sector, as well as mining and resources, finance and healthcare,” the report said.
The overall value of global M&A was down by 35 per cent compared to the first half of 2022 and with a 37 per cent slump in the mid-market.
However, it was good news for Australia as the country’s M&A value increased by 13 per cent compared to the first half of 2022. Australian transactions in the first half of 2023 were worth $64.8 billion, coming from 390 deals. The number of deals has decreased by 26 per cent compared to those recorded in 2022.
The value figure is said to be influenced by the $26.6 billion Newmont purchase of Newcrest, which has made up approximately 41 per cent of the total deal value in Australia during the first half of 2023.
“Energy, mining and utilities made up 78 per cent of deal value in the first half of 2023, and even without the inclusion of the Newcrest sale, the sector still made up 50 per cent of total sales,” the report said.
Pitcher Partners Sydney corporate finance partner Andy Hough said that while values remain strong, Australian deal volumes were the lowest in more than five years, which he attributed to deals taking longer to complete in comparison to 12 months ago.
“Due diligence is becoming an increasingly drawn-out process, with factors such as environmental, social, and corporate governance (ESG) and increased regulatory burdens leading to a greater depth of scope,” Hough said.
A key example of this is the Newmont acquisition of Newcrest recently receiving approval from the Canadian Competition Bureau and Papua New Guinea’s Independent Consumer and Competition Commission.
“While that has negatively impacted on deal numbers in this half, it should result in an uptick of completed deals in the second half of the year,” Hough said.