16/01/2017 - 14:18

M&A advisers to battle back after soft 2016

16/01/2017 - 14:18


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SPECIAL REPORT: Investment bank Gresham Partners and law firm King & Wood Mallesons were the top advisers on mergers and acquisitions in WA in 2016.

M&A advisers to battle back after soft 2016
Nigel Hunt is cautiously optimistic about 2017. Photo: Attila Csaszar

Investment bank Gresham Partners and law firm King & Wood Mallesons were the top advisers on mergers and acquisitions in WA in 2016.

Some of Western Australia’s largest companies have targeted offshore growth during the past 12 months, while international firms have continued to buy mid-sized Perth businesses.

Wesfarmers led the international moves, buying Home Retail Group in the UK, where it hopes to replicate its Bunnings success story.

Woodside Petroleum also sought opportunities overseas, buying assets in Senegal, while mineral sands miner Iluka Resources bought Sierra Rutile in Africa.

Other WA companies on the expansion trail last year included Hancock Prospecting, which joined with a Chinese partner to buy the iconic Kidman cattle empire, and Tox Free Solutions, which continued its growth by acquisition strategy across Australia.

On the other side of the ledger, WA businesses that changed hands included IT firm ASG Group, Kailis Bros, Sealanes and Perthwaste.

These mergers and acquisitions are among 271 WA deals worth $17 billion compiled by Business News in the BNiQ Search Engine.

The number of deals is up from 199 recorded for 2015, though the value is down substantially from $27.2 billion.

If Woodside’s ill-fated tilt at Oil Search were excluded from the 2015 numbers, the deal value trend would have been different.

Despite that, most advisers say 2016 did not feel like a strong year.

They include King & Wood Mallesons partner Nigel Hunt, whose firm was ranked as the top legal adviser in the BNiQ Search Engine.

Mr Hunt said the past year was marked by caution and uncertainty, particularly on the global political front, and he was more optimistic about 2017.

“Each time we got some stability, the market was hit by another shock,” he said.

Some of the positives for Australia include low interest rates, more confidence about the Australian dollar and a relatively safe political framework.

“There is still plenty of money out there looking for a home,” Mr Hunt said.

Having advised ASG Group on its friendly $349 million takeover by Japan’s Nomura Research Institute, he also sees potential for more activity in areas like health, technology and biotech.

“It feels to me like the WA market is starting to broaden its scope,” Mr Hunt told Business News.

Major plays

A couple of big mining deals late in the year have boosted confidence about the market outlook.

Melbourne-based private equity group EMR Capital surprised observers when it paid $290 million for the Golden Grove base metals mine in the Mid West.

The Golden Grove deal came a few weeks after Gold Fields agreed to pay $350 million for a 50 per cent stake in Gold Road Resources’ Gruyere gold project.

Allen & Overy partner Geoff Simpson, who advised EMR, believes there’s plenty of upside to the outlook.

“M&A needs confidence, and I think that is returning to the mining sector,” Mr Simpson said.

He said the recovery in commodity prices during the past year, and their relative stability, was a key factor.

“The value differential between buyers and sellers has to some extent evaporated,” Mr Simpson said.

“The aspirations of vendors aren’t necessarily being met but there is a valuation range where people are able to do deals.”

Gilbert + Tobin energy and resources partner Claire Boyd, who led a team advising Gold Fields, believes Gruyere was one of the most highly contested development opportunities in the WA market.

“The transaction is a great achievement for both parties and has essentially unlocked a new and emerging gold field in WA,” Ms Boyd said.

The Gruyere project aims to begin production by early 2019 and is expected to support average yearly production of 270,000 ounces over a 13-year mine life.


The top-ranked financial advisers for the year were national players Gresham Partners and Macquarie Capital, which both worked on the year’s largest announced deal – Australian Grain Champion’s attempted hostile takeover of farm cooperative CBH Group.

Gresham’s second big job was advising the Barnett government on the sale of a $1.35 billion Keystart housing loans portfolio.

Macquarie had a much broader spread of work, advising on 11 transactions for clients including Emeco Holdings, EMR Capital and DUET Group.

The only other adviser that came close to this volume of work was Perth outfit Azure Capital.

It advised on nine announced transactions with a disclosed value of $243 million, including privatisation of the Perth Market Authority.

The published league tables do not tell the full story, as they can include transactions where the value is not disclosed.

Azure, for instance, advised St John of God Health Care on the sale of its pathology division, and MercyCare on the purchase of Belrose Care Group.

Similarly, EY worked on two significant transactions without a disclosed value – the sale of Perth businesses Sealanes and Rottnest Express to private equity buyers. 

A notable entry on this year’s M&A league table was east coast outfit Treadstone Resource Partners.

Its work for local companies such as Gold Road Resources and Independence Group showed a Perth shopfront is not needed to win work here.

Law firms

Law firms in Perth participated in many more transactions than the financial advisers.

King & Wood Mallesons worked on 12 transactions worth $5.31 billion, putting it ahead of Allen & Overy and Gilbert + Tobin.

KWM’s largest deal was advising CBH on its successful defence of the Australian Grains Champion bid.

A notable transaction that slipped below the public radar was AMP Capital investing $60 million to become the new owner of the Kalgoorlie regional prison.

AMP bought out Lendlease Infrastructure Investments and MLC, which were the original equity investors in the public private partnership development.

Another relatively small but notable transaction was advising St John Ambulance WA on its $22 million purchase of Apollo Health.

Like other global law firms in Perth, King & Wood Mallesons has secured work with international groups transacting in the region.

Partner Shaun McRobert led a team that advised China’s Hony Capital on the sale of its 11.7 per cent share in Santos to ENN Ecological Holdings for $US750 million.


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