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2011 a bumper year for Australian M&A activity

Thursday, 5 January 2012 | By Michelle Hammond
Australian merger and acquisition activity soared in 2011, thanks to multibillion dollar deals made by major mining companies, but Australian IPO volume was at its lowest level since 2001.

 

According to Dealogic, inbound M&A in Australia rose for the third consecutive year in 2011 to a record US$65.7 billion, boosted by SABMiller’s US$13.1 billion takeover of Foster’s Group.

 

Australia also featured in the top ten global transactions of 2011 via BHP Billiton’s US$15 billion takeover of Texan company Petrohawk Energy; also the year’s biggest cross-border deal.

 

The only other Australian deal that made the top 50 was Whitehaven Coal, which acquired Aston Resources for US$2.34 billion.

 

Meanwhile, Australian IPO volume of A$1.1 billion was the lowest level since 2001, when A$760 million was raised. None of the year’s top ten deals was an IPO.

 

But according to a survey by global law firm Allen & Overy, Australia is expected to remain a hotspot of M&A activity thanks to its cashed-up companies, defying a worldwide slump.

 

Globally, the number of mergers and acquisitions has fallen 10% in the past year to 725 as banks reined in lending, according to the survey.

 

But in Australia, the strength of the economy – coupled with the thriving energy and resource sectors – has positioned Australian companies as a “safe haven” for investors, the survey said.

 

There was no shortage of impressive deals made in Australia last year, suggesting we can indeed expect more of the same in 2011.

 

In May, Groupon’s Australian operation Stardeals – which now shares the Groupon name – acquired Melbourne-based group-buying site Crowdmass for an undisclosed sum.

 

Crowdmass was founded in 2010 by high school friends Tim Wu, David Wei and Ying Wang, all of whom are university graduates in their early twenties.

 

The trio was responsible for every aspect of their site, including marketing, sales, site maintenance and customer service. They took in almost $40,000 on one of their very first deals.

 

Then in June, media conglomerate News Limited acquired online parenting start-up Kidspot, and its related companies, for an undisclosed sum.

 

Kidspot, a portfolio of online and offline services aimed at women and mothers, was launched in 2005 by chief executive Katie May.

 

News Limited would not say how much it paid for Kidspot, but reports suggested it could be close to $50 million. It is understood other parties, including Fairfax, considered Kidspot during the sale process.

 

However, the deal that generated the most interest in 2011 was that of group-buying site Spreets, acquired by Yahoo!7 for $40 million in January.

 

Founded by Dean McEvoy in 2010, Spreets gained the attention of tech seed fund Pollenizer, which provided the launchpad for the business.

 

“The acquisition of Spreets should let all entrepreneurs know what is possible in Australia,” Pollenizer co-founder Mick Liubinskas told StartupSmart.

 

“You can have products and business plans, but you really need to just get out and do it. If you’ve got the right people and are focused on what you’re doing, anything is possible.”