Low interest rates will produce slow growth in the Australian mergers and acquisitions market, according to Allens Arthur Robinson M&A practice leader Tim Bednall.
Research by Thomson Financial released today showed a 43% increase in M&A transactions for the first six months of 2003.
Mr Bednall cautioned that this growth was coming off a very flat M&A market and, while low interest rates worldwide would encourage borrowing for acquisitions, a stronger Australian dollar would make local companies less attractive to foreign bidders.
“We’re not looking at a major acceleration in the M&A market place growth in the coming six months,” said Mr Bednall. “The strengthening Australian dollar is great if you want to holiday in the US but not so enticing if you’re a foreign business looking to buy Australian companies.”
“The good news is that worldwide low interest rates will encourage borrowing for acquisition and the dollar’s strength will encourage Australian companies to look offshore for opportunities.”
Allens Arthur Robinson topped announced deals on Thomson’s table and has consistently headed the announced or completed deals table over the past three years.
Mr Bednall said property trusts, financial services and resources would all feature in M&A activity leading into 2004.
“Over the past few months, we’ve been busy on property trusts and resources deals in particular,” said Mr Bednall.
“The strong likelihood is that there’s going to be rationalisation in the property trust sector, making this one of the busiest areas going forward.
“We also expect to see continued growth in the financial sector, especially with the sale of banking assets in New Zealand and, while the crystal ball is a little more clouded, I’d expect the resources sector to also remain busy,” said Mr Bednall.