TAKEOVERS + SCHEMES REVIEW
2020
GTLAW.COM.AU 1 THE GILBERT + TOBIN 2020 TAKEOVERS + SCHEMES REVIEW
After a seven-year high in 2018, public M&A involving ASX-listed companies softened in 2019. Some key themes from 2019 were:
+ 41 transactions valued over $50 million were announced in 2019, down from 49 transactions in 2018. The aggregate transaction value decreased significantly from $48.7 billion in 2018 to approximately $24 billion in 2019.
+ The healthcare sector made the greatest contribution to announced public M&A by value, followed closely by retail & consumer services and industrial products.
+ Cashed up private equity firms sought out public M&A targets in a significant way, willing to deploy approximately $10.3 billion on a range of targets in 2019, equivalent to 44% of the aggregate transaction value.
+ While the number of transactions involving a foreign bidder was broadly the same as recent years, the aggregate deal value attributable to foreign bids fell by more than half from $42 billion in 2018 to $19 billion in 2019. Bidders from North America were the most active, while interest from China was more subdued.
+ 89% of the total number of announced M&A transactions over $50 million were successful in 2019, despite the slight drop in average final premium paid by bidders.
+ The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry ignited increased scrutiny and action by corporate regulators. The number of ASIC enforcement actions increased by 20% and the Takeovers Panel heard 38 applications, the second highest in its 20-year history.
This Review, which was released on 12 March 2020, examines 2019’s public M&A transactions valued over $50 million and provides our perspective on the trends for Australian public M&A in 2019.
We trust you will find this Review to be an interesting read and a useful resource.
2 CONTENTS
KEY HIGHLIGHTS 4 1 MARKET ACTIVITY 6 2 SECTOR ANALYSIS 10 3 TRANSACTION STRUCTURES 14 4 FOREIGN BIDDERS 16 5 CONSIDERATION TYPES 24 6 SUCCESS FACTORS 27 7 TRANSACTION TIMING 31 8 IMPLEMENTATION AGREEMENTS 34 AND BID CONDITIONS 9 THE REGULATORS 39 2019 PUBLIC M&A TRANSACTIONS 47 OUR APPROACH 49 ABOUT GILBERT + TOBIN 50 RECENT GILBERT + TOBIN TRANSACTIONS 51 ABOUT THE AUTHORS 56 AWARDS AND RECOGNITION 62 GILBERT+ TOBIN M&A PARTNERS 63
3 KEY HIGHLIGHTS
PRIVATE EQUITY AND RETAIL & CONSUMER TRANSACTION ACTIVITY SUPERANNUATION SERVICES AND HEALTHCARE SOFTENS FUNDS ACTIVE LED THE WAY
After a seven-year high for public M&A While overall activity may have been down, Healthcare and retail & consumer services transaction activity in 2018, activity private equity continued to be a significant emerged as the top performing sectors by softened in 2019 with a decrease in both source of activity in 2019, being the transaction value, contributing 27% and 21% the value and number of transactions. 41 proponents in public transactions with a of total transaction value respectively. Retail transactions valued over $50 million were value of approximately $10.3 billion last & consumer services represented 20% of announced, down from 49 transactions in year. This represented 44% of aggregate the total number of transactions, while the 2018, representing a 16.3% reduction. transaction value (up from 28% in 2018) healthcare sector contributed 15% of the and 24% of transaction volume (consistent transaction volume. The aggregate transaction value decreased with 2018). A range of PE houses were significantly in 2019, with approximately The energy and resources sector represented active in public deals in 2019 including $24 billion in transactions announced, 17% by number and 7% by value of public M&A BGH Capital, TPG, KKR, Brookfield, PEP, compared to $48.7 billion in 2018. This transactions in 2019, demonstrating a reduction Quadrant and Adamantem to name a few. is the lowest aggregate transaction value in the contribution from this sector from 2018. since 2013 and a fall of more than 50% from 2018. This was primarily due to a fall in the number large transactions, with only 11 transactions valued at over $500 million announced in 2019, compared to 21 in 2018. Even if one excludes the ~$13 billion unsuccessful offer for APA Group in 2018, it is clear that there was a significantly lower aggregate value of public M&A transactions in 2019. It is difficult to pinpoint the causes for the fall. Perhaps, the federal election in May INTERESTINGLY, 2019 ALSO SAW 2019 had some part in it being a softer year. Other potential reasons include greater SIGNIFICANT INVOLVEMENT OF instability from geopolitical tensions and, on the local front, greater regulatory scrutiny. AUSTRALIAN SUPERANNUATION FUNDS IN PUBLIC M&A FOR THE FIRST TIME In particular, AustralianSuper was a key part of the BGH Capital consortium’s proposals for Healthscope and Navitas and used its significant shareholding to drive the Navitas transaction. QIC Private Capital also made a successful public M&A bid for Pacific Energy. This evidences superannuation funds’ shift from being purely passive investors to active drivers of activity.
4 SUCCESS RATES UP & VALUE OF FOREIGN SCHEMES INCREASINGLY REGULATORS INVESTMENT FALLS THE TRANSACTION UNLEASHED STRUCTURE OF CHOICE Foreign investment activity in 2019 in Friendly / agreed acquisitions by scheme The Financial Services Royal terms of deal volume was broadly the of arrangement are increasingly the Commission seemed to galvanise same as recent years, with 56% of all preferred approach for bidders. public opinion and scrutiny of large public deals over $50 million involving corporates further in 2019. 89% of the total number of announced foreign acquirers compared to 59% in M&A transactions over $50 million Regulators, including ASIC and 2018 and 63% in 2017. were successful in 2019, representing APRA, which were criticised for However, more strikingly, the aggregate a significant increase over 2017 where not taking stronger action sooner deal value attributable to foreign bids only 70% of transactions reached a against misconduct, have stepped up fell by more than half from $42 billion successful outcome and an increase over regulatory action. in 2018 to $19 billion in 2019. 2018 where 80% were successful. ASIC’s controversial ‘why not Despite lower volumes and values, The increased use of schemes of litigate?’ approach has seen the foreign bidders enjoyed higher success arrangement, particularly in high value regulator increase its regulatory rates in 2019 with 95% of foreign bids transactions, is a continuing trend which presence with a 20% increase in the succeeding compared to 76% in 2018. is strengthening. 83% of transactions number of enforcement actions over over $50 million proceeded by way FY 2018-2019. It is also progressing Notably, European bidders who of scheme in 2019. This represents an criminal prosecutions in relation to accounted for 12% of bidders by 18% increase over 2018, where 65% of three different M&A transactions, transaction number in 2018 only transactions over $50 million proceeded including most recently against Ms represented 7% of bidders in 2019. by way of scheme. Jan Cameron for allegedly failing to However, interest from North disclose a substantial shareholding American acquirers increased in Transactions which proceeded by way of interest in Bellamy’s Australia, which 2019, representing 29% of bidders by scheme enjoyed greater success rates in was ultimately taken over by China transaction number, up from 18% in 2019 with 90% of schemes succeeding Mengniu Dairy Company last year. 2018. Asian acquirers represented 17% in 2019, compared to 72% in 2018. of total bidders. The ACCC continues to be activist in its approach to investigating mergers. However, the ACCC also extended its losing streak in merger decisions before THE AGGREGATE DEAL VALUE the courts/tribunals to seven with the ATTRIBUTED TO FOREIGN BIDS Federal Court recently allowing the Vodafone/TPG merger to proceed. FELL BY MORE THAN 50% TO The Takeovers Panel was also very busy in 2019, hearing 38 applications. $19 BILLION This was the second highest ever, as the Panel comes to celebrate its 20th birthday in March 2020.
5 1 MARKET ACTIVITY
Public M&A activity down after bumper 2018 However, and significantly, the number of transactions worth over $500 million almost halved from 21 to 11 (albeit, it is worth noting In last year’s Review, we reported that Australian public M&A that 2018 was an eight-year high in this regard). The decrease activity was the highest it had been for the past seven years. in larger transactions overshadowed the slight increase in deals At the time, it was noted that the federal election and expected between $50 and $500 million from 28 in 2018 to 30 in 2019. tightening of regulatory oversight might dampen transaction When measured by aggregate transaction value, the fall in public activity in 2019. M&A activity in 2019 appears even more pronounced, decreasing It seems that cautionary note became reality in 2019. Although by more than 50% from 2018 levels to approximately $24 billion. transaction activity was solid, transaction values failed to match This was a direct result of the marked decrease in higher-value the highs of 2018. deals. Indeed, the number of $1 billion+ deals almost halved from 10 in 2018 to six in 2019, with no deals over $5 billion (unlike in In total, there were 41 transactions valued at $50 million or more recent years). Interestingly, while large deals were done, the ASX in 2019, representing a 16.3% decrease from the previous year but 200 increased some 15% in the 2019 calendar year. Perhaps consistent with 2017 levels (which was a five-year high at the time). pricing in 2019 was too expensive for the liking of bidders?
Transaction announcements per year by number Total transaction value per year 60 60 49 46.0 48.7 50 40 42 41 41 41.4 40 37 36 10 21 30 11 11 30 30 24 14 12 22.1 23.7 24.0 10 20 20 6 16.1 24.6 30 30 32 28 23 24 10 18 20 10 Number of transactions announced Number 0 value of transactions ($ billion) Total 0 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 $50m to $500m $500m+ transactions Total value of transactions
ALL SIX TRANSACTIONS Distribution of transaction values 0 > 5000 2 EXCEEDING $1 BILLION 2 6 1000 - 5000 8 INVOLVED A FOREIGN BIDDER 3 5 500 - 1000 11 This continues the trend from 2018 of foreign bidders 6 23 being significant players in the highest value public M&A 23 100 - 500 20 transactions. 7 5 50 - 100 10 Overall, however, the proportion of foreign bids was lower in 0 5 10 15 20 25 2019 compared to 2018. More on this in Chapter 4. Number of transactions Value of transactions ($ million) Value 2019 2018 2017
6 Private equity prominent again Following a triumphant return by private equity in 2018, Notably, private equity again had a strong appetite for private equity firms were once again strongly acquisitive in M&A in the healthcare sector in 2019, with 30% by 2019, as predicted in last year’s Review. number and 57% by value of overall private equity M&A activity being in that sector, up from 17% by number and While the proportion of private equity transactions by 15% by value in 2018. Private equity interest in retail & volume remained similar to 2018 at 24% of all deals over consumer services also remained strong, albeit failing to $50 million (10 deals in 2019 compared to 12 in 2018), match 2018 levels, accounting for 20% by number and private equity bidders accounted for 44% of public M&A 24% by value of private equity investment, down from deals by value, up from 28% in 2018 and only 2% in 2017. 34% by number and 32% by value.
HEALTHCARE RETAIL & CONSUMER UTILITIES 57% 24% 12% REAL ESTATE 4% SERVICES Healthscope Aveo Group Pacific Energy ($4.4 billion) Navitas ($1.3 billion) ($467 million) ($2.1 billion) Metlifecare ($1.4 billion) QMS Media ($421 million) Konekt ($74 million)
INDUSTRIAL FINANCIALS PROFESSIONAL 1% PRODUCTS SERVICES 1% Pioneer Credit 1% Legend Corporation ($120 million – Dreamscape Networks ($79 million) current) ($105 million)
Percentage of PE investment across all PE deals, by value
7 Timing of announcements There was a strong start to 2019, with seven transactions announced in January and February, including the $4.4 billion acquisition of Healthscope by Brookfield. As anticipated, public M&A activity slowed down in the second quarter with the federal election occuring in May. It is also likely that foreign bidder activity slowed due to FIRB entering “caretaker” mode during the election period and not making any significant decisions as per convention.
Timing of announcements 10 7,000 9 6,800 8 6,600 7 6,400 6 6,200 5 6,000 4 5,800 3 5,600 S&P/ASX 200 S&P/ASX 2 5,400 Number of Transactions Number 1 5,200 5,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019 S&P / ASX 200 (2018) S&P / ASX 200 (2019)
Deal activity picked up after the election, particularly in July and October, where six transactions were announced in each of those months, including:
Quadrant Private Equity’s PSP Investment’s Seven West Media’s QIC Private Capital’s $421 million acquisition of $724 million acquisition of unsuccessful acquisition of $467 million acquisition of QMS Media Webster Prime Media Group Pacific Energy
8 TRANSACTION HIGHLIGHTS
$1 BILLION+
+ Brookfield’s $4.4 billion acquisition of Healthscope + Nippon Paint’s $3.8 billion acquisition of DuluxGroup + BGH Capital consortium’s $2.1 billion acquisition of Navitas + China Mengniu Dairy Company’s $1.5 billion acquisition of Bellamy’s Australia + EQT’s proposed $1.4 billion acquisition of Metlifecare + Brookfield’s $1.3 billion acquisition of Aveo Group
$500 MILLION+
+ AP Eagers’ $836 million off-market takeover offer for Automotive Holdings + Wesfarmers Lithium’s $769 million acquisition of Kidman Resources + PSP Investments’ $724 million acquisition of Webster + Shell Energy Australia’s $617 million acquisition of ERM Power + Fox Corporation’s $585 million acquisition of Credible Labs Inc
9 2 SECTOR ANALYSIS
HEALTHCARE Key sectors led the way in terms of aggregate deal In 2019, the healthcare sector led the way by value, contributing 27% of total value, largely due to Brookfield’s transaction value, a significant increase from 10% in 2018. This was largely driven by $4.4 billion acquisition of Healthscope the $4.4 billion acquisition of Healthscope by Brookfield and EQT’s $1.4 billion offer (the largest transaction by value in 2019) to acquire retirement village provider Metlifecare just prior to the end of the year. Activity in the healthcare sector was diverse with hospitals, veterinary clinics, RETAIL & CONSUMER pharmaceuticals, aged care and OH&S all attracting investment. Deal activity SERVICES in the healthcare sector increased slightly with six transactions in 2019 (up from strongly represented in both five in 2018). number of deals and aggregate Retail & consumer services came in second by deal value (21%), with industrial transaction value products coming in third (17%), largely due to Nippon Paint’s $3.8 billion acquisition of DuluxGroup.
ENERGY & RESOURCES The healthcare, industrial products and retail & consumer services sectors were also the sectors with the three largest transactions by value. continues to attract significant public M&A activity by By number of transactions, retail & consumer services led public M&A activity transaction volume in 2019, accounting for 20% of transaction volume. Energy & resources was the second largest contributor to transaction volume (17%) followed by healthcare (15%). HEALTHCARE REMAINED THE KEY SECTOR WITH 15% OF TRANSACTIONS BY NUMBER AND 27% OF AGGREGATE TRANSACTION VALUE (UP FROM 10% BY NUMBER AND 10% BY VALUE IN 2018)
Transactions per sector (number vs value) 30% 27% 25% 21% 20% 20% 17% 17% 15% 15% 10% 10% 10% 9% 9% 7% 7% 7% 5% 5% 3% 5% 5% 2% 2% 0% 1% 1% 0% Transportation Professional Utilities Energy & Retail & Real Estate Food, Telecommunications Financials Healthcare Industrial & Logistics Services Resources Consumer Beverage Products Services & Tobacco Proportion by number of transactions Proportion by total value of transactions
10 Top transactions by sector The top five transactions by value came from four different sectors:
1 2 3 4 5
Healthcare Industrial Products Retail & Consumer Food, Beverage and Healthcare (Hospitals) (Construction Services Tobacco (Consumer (Aged care) Materials) Staples)
Brookfield Asset Nippon Paint’s BGH’s successful China Mengniu Dairy EQT’s proposed Management’s successful acquisition of acquisition of Navitas Company’s successful acquisition of successful acquisition of DuluxGroup by scheme by scheme of acquisition of Bellamy’s Metlifecare by scheme Healthscope by scheme of arrangement arrangement Australia by scheme of of arrangement of arrangement arrangement
$4.35 billion $3.82 billion $2.09 billion $1.5 billion $1.44 billion
11 Energy & resources Transactions in energy & resources and other key sectors The energy & resources sector performed Healthcare (27%), retail & consumer services (21%) and well again in 2019 but saw a moderate 70% decline in the proportionate value and industrial products (17%) by value 60% number of transactions. Utilities (34%) and real 50% 48% 46% estate (21%) by value After contributing the greatest number of 38% M&A transactions in 2018, the energy & 40% 35% 32% 30% 29% resources sector contributed the second 27% 24% largest number of transactions (17%) 20% 13% 17% in 2019. There were seven deals in the 10% 10% 9% sector in 2019, down from 14 in 2018. 10% 4% 1% 7% 0% The sector contributed 7% to the 2012 2013 2014 2015 2016 2017 2018 2019 aggregate value of transactions, slightly Energy & Resources (by number) Energy & Resources (by value) down from 9% in 2018.
2019’S STANDOUT Wesfarmers Lithium’s $769 million Independent Group’s ultimately TRANSACTIONS IN THE SECTOR acquisition of Kidman Resources by unsuccessful $320 million hostile bid INCLUDED: scheme of arrangement for Panoramic Resources, one of the few old-fashioned hostile bids in the market last year
12 Sectors of interest for foreign bidders 56% of the transaction volume in 2019 involved foreign bidders. In 2018, there was significant foreign interest in energy & resources, real estate and financials, while 2019 saw strong foreign interest in healthcare, retail & consumer services and industrial products. In terms of value, the healthcare sector represented 33% of the total value of foreign bids, largely attributable to the $4.4 billion acquisition of Healthscope by Brookfield and EQT’s proposed $1.4 billion acquisition of Metlifecare. This was followed by industrial products (with 21.3% of foreign bids by value), which was mainly due to Nippon Paint’s $3.8 billion acquisition of DuluxGroup.
Key sectors for foreign bidders 10 9 8 7 7 6 6 5 5 5 4 4 4 3 3 3
Number of bidders Number 2 2 2 2 2 1 1 1 1 1 1 1 1 0 0
Healthcare Retail & Consumer Industrial Professional Energy Food, Beverage Real Utilities Financials Telecommunications Services Products Services & Resources & Tobacco Estate 2018 2019
13 3 TRANSACTION STRUCTURES
Schemes continue to be the preferred transaction structure
In 2019, 83% of all transactions valued over $50 million proceeded by way of scheme of arrangement as opposed to takeover bid. This is a significant increase from 2018 where 65% of transactions were undertaken by scheme. It continues and amplifies the long-term trend we have observed over recent years. As the graph below reflects, the historical “50/50” nature of the takeover or scheme divide is well and truly behind us. Bidders and targets alike now prefer the transaction and timetable certainty offered by a scheme. This is particularly relevant for private equity firms which generally need to undertake due diligence and acquire 100% of a target to obtain financing.
Schemes v takeovers ($50m+) Schemes v takeovers ($1b+)
2019 50% 83% 17% 2019 50% 100%
2018 65% 35% 2018 100%
2017 63% 37% 2017 80% 20%
2016 67% 33% 2016 83% 17%
2015 46% 54% 2015 83% 17%
2014 49% 51% 2014 45% 55%
Schemes ($50m+) Takeovers ($50m+) Schemes ($1b+) Takeovers ($1b+)
The preference for schemes of arrangement over takeover bids continues to be more pronounced for transactions valued over $1 billion. As in 2018, all transactions exceeding $1 billion announced in 2019 were structured as schemes. As one would expect, the greater the amount of capital at risk, the more a bidder needs to do due diligence, is likely to have third party financing and will therefore prefer the certainty of outcome offered by a scheme.
Pre-bid stakes The considerable majority of bidders using a takeover bid (rather Where the bidder has a large pre-bid holding, the choice than a scheme) in 2019 had a pre-bid shareholding in the target of takeover bid over scheme of arrangement is generally prior to announcement of the transaction. 71% of takeover understandable given that the acquirer is unable, in the bids involved a bidder who held (or acquired) a physical pre- context of a scheme, to vote its shares at the shareholder bid holding in the target. The size of these stakes ranged from meeting to approve the transaction. That said, eight bidders Independence Group’s 4% pre-bid shareholding in takeover with pre-bid stakes of 10% or more still opted to proceed by target Panoramic Resources through to Grafton Health way of scheme rather than takeover bid in 2019 (potentially Holdings’ 93% pre-bid shareholding in Orion Health Group. because an all-or-nothing outcome was required).
14 Hostile bids a thing of the past? Only 5% of all transactions in 2019 were commenced on a hostile or unsolicited basis, down from 12% in 2018 and 20% in 2017. This trend is perhaps unsurprising given: + The increasing preference of bidders for schemes of arrangement, which are necessarily friendly as they require the cooperation of the target’s board. + The general acceptance of confidential non-binding indicative offers and bear hugs (involving a scheme of arrangement) as a way of progressing unsolicited approaches. The lack of a put up or shut up rule in Australian takeover laws means an unwelcome unsolicited approach can pressure a target over many months without having to formally make a takeover bid. Of the two hostile bids in 2019, the largest was the ultimately successful $836 million off-market takeover of Automotive Holdings Group by AP Eagers. Independence Group’s withdrawn offer to acquire Panoramic Resources is the other notable hostile bid made during 2019.
Hostile v Friendly 100%
80%
60% 58% 76% 80% 80% 88% 40% 95% % of Transactions 20% 24% 42% 20% 20% 12% 5% 0% 2014 2015 2016 2017 2018 2019 Hostile Friendly
No on-market bids in 2019 On-market takeover bids remain very rare in the Australian market. In 2019, there were no on-market takeover bids valued over $50 million (down from two in 2018 and one in 2017).
15 4 FOREIGN BIDDERS
Data A year of consolidation Like various other countries, FIRB has been increasing its focus on the protection of As far as Australia was concerned, 2019 sensitive data. This will only increase as data proliferates in, and between, businesses. was a year of consolidation when it came to foreign investment. The type of data that may need to be protected includes personal data of Australian residents and citizens (eg acquisitions in the healthcare sector), government / In 2019, the Foreign Investment national security data and data / information relating to critical infrastructure. FIRB Review Board (FIRB), and has also had to consider an increased number of foreign investment proposals associated agencies like the Critical seeking to acquire data centres and other facilities that house, or have access to, Infrastructure Centre and government sensitive private data. departments concerned with national security (as well as tax), continued to Of course, the concern for malicious actors to access, and exploit, sensitive data is a deepen their oversight and review of general concern in these times. foreign investment. That said, in 2019, unlike previous years, there were THE FIRB APPROACH HAS GENERALLY no high-profile foreign acquisitions in sensitive industries, no public BEEN TO MITIGATE THE POTENTIAL rejections of applications for FIRB PROBLEMS THROUGH THE DEVELOPMENT approval and no particular foreign investment controversies. Perhaps OF DATA SECURITY CONDITIONS RATHER this was a result of fewer large foreign THAN OUTRIGHT PROHIBITION acquisitions, challenges in the banking industry (post Financial Services Royal Commission), no large cross border deals in the energy & resources sector and generally reduced Chinese state-owned investment. In any case, the lack of controversy was no doubt welcome to the Government in a federal election year. ALL IN ALL, WE CONSIDER 2019 TO BE A YEAR OF CONSOLIDATION That said, there were a few areas of development which are worth noting.
16 THE FIRB DATA SECURITY CONDITIONS HAVE GENERALLY FOCUSSED ON: Continued focus on THE TYPES of data people can access taxation matters FIRB consults with the Australian Taxation OfficeATO ( ) during the WHO approval process. The ATO has in may access the data recent years increased its focus on multinational tax avoidance. While not in the context of foreign WHERE can they access the data from acquisitions, the ATO’s focus was evident in the recent $481.5 million settlement with Google WHERE in respect of its tax practices the data is physically stored (for example, if it is stored in the cloud, there between 2008 and 2018. This are some cloud service providers that are on a government “white list”) brings tax settlements in the last two years between the ATO and a range of multi-nationals including Firstly, the drafting of the conditions could be improved by defining key terms. Microsoft, Apple and Facebook to Secondly, the conditions can significantly impact the way a business is operated if approximately $1.25 billion. they are not thoroughly thought through. For example, there is often a condition It has become the usual practice preventing sensitive information being accessed from offshore. This can cut across for large foreign acquisitions the way a target business is currently run if they have an offshore call centre that to face a range of standard provides customer service. In this respect, it is important for the target to be more tax conditions around their involved in the FIRB approval process, and particularly in negotiating the terms of structuring, ongoing reporting and any conditions, than may otherwise be the case so they can ensure the business can general compliance. continue to be run in an optimal manner post acquisition. Consultation with the ATO can The increasing importance of data may mean that the government will before long also prolong the approval process. need some more specific legislation about the protection of data. Stating the obvious, these threats and issues do not only apply to businesses in the process of acquisition by foreigners. In this respect, using the foreign investment rules for the protection of data is a suboptimal approach.
17 Decreased Chinese interest Chinese state-owned investment (and private investment with close Clearly it is important that relations do improve as China is links to the Chinese state) has always been a vexed issue for FIRB. Australia's largest two-way trading partner, by quite some FIRB has been at pains to say its approach to considering margin. Chinese companies are also the fifth largest holder applications for approval is non-discriminatory as to jurisdiction of foreign direct investments in Australia. The Australian of acquirers (as distinct from the nature of the acquirers). Government’s approach to the coronavirus outbreak may also However, it is clear this is an issue. For example, in relation to test relations and will be critical for many businesses, including the assessment of data protection, there is going to be much the education sector. more attention when it is a Chinese foreign government investor In recent years, China has been Australia’s largest source of compared to an American private equity fund. proposed foreign investment year-on-year, except for 2018, Indeed, the FIRB chairman, David Irvine, has sought to when the US was the largest source country for that year. improve the public relations on FIRB’s approach to Chinese While official statistics have not been released for 2019 as yet, investment by giving two public presentations in the second it is clear that the incidence of acquisitions of Australian public half of 2019 to Chinese investment orientated organisations. companies by Chinese investors is much lower. That said, this He sought to highlight that Australia seeks to encourage is also attributable, in some part, to global conditions and the Chinese investment, pointing to various approvals over time. impact of Chinese capital controls. This is despite tension around Sino-Australian investment Indeed, large foreign acquisitions in 2019 seem to have been relations caused by the prohibition on Huawei equipment in dominated by US and Canadian companies (including Brookfield Australia’s 5G rollout and rejections of acquisitions in the for Healthscope and Aveo). Interestingly, there was a renaissance in energy & resources sector in recent years. China Mengniu Japanese acquisitions in 2019, including Asahi’s $16 billion acquisition Dairy Company’s $1.5 billion acquisition of Bellamy’s, of Carlton & United Breweries, Nippon Paint’s $3.8 billion takeover Australia’s leading organic infant formula business, is a recent of DuluxGroup and Nippon Paper’s $1.7 billion purchase of Orora’s example of a Chinese acquisition that was approved in 2019. Australasian cardboard box manufacturing business.
THE FIRB CHAIRMAN, DAVID IRVINE, HAS SOUGHT TO IMPROVE PUBLIC RELATIONS ON FIRB’S APPROACH TO CHINESE INVESTMENT BY HIGHLIGHTING APPROVALS OVER TIME
18 Timing Anecdotally, the speed of the FIRB approval process for That all said, in FIRB’s view, despite numerous complaints large or sensitive matters slowed in 2019. This is generally about timetables, 80-90% of FIRB decisions are reached and considered to be a function of the increased scrutiny from communicated within the initial 30-day review period. government agencies arising out of the wider consultation FIRB does accept that more complex cases take longer, particularly FIRB now undertakes. for acquisitions that raise novel issues (eg with data) or where the In addition, in 2019, the government entered caretaker mode government itself is in the process of finding solutions. David Irvine ahead of the federal election in May, which may have slowed has stated “that a great majority of decisions are made within that the overall approval process during that time. On a related statutory period is a good indication that, if there is a delay, there matter it should be noted that the re-election of the Liberal is usually a good reason for that delay. We have to balance the government has resulted in a largely unchanged approach to need for quick decision making with the need for correct decision foreign policy. Nevertheless, the increased scrutiny, especially making” and that “FIRB’s role is to facilitate, not to obstruct foreign on tax and data matters, is likely to mean approvals will not investment. If it is taking longer, it is often because we are searching happen any quicker in 2020. for a method to facilitate”.
19 Worldwide trend Australia is not alone in recognising and responding to national security challenges. It is definitely part of a worldwide trend to more closely scrutinise foreign investment and to protect one’s borders. For example: + In the US, the Trump administration has broadened and strengthened the remit of the Committee on Foreign Investment in the United States (CFIUS) with respect to national security matters in response to growing concerns over the trade and industrial policies of certain foreign countries (especially China). This is aimed at increasing CFIUS’s existing authority to review and potentially block or unwind investments in US businesses and critical US technology, infrastructure, personal data and real estate that may give rise to US national security concerns. + In October 2019, the UK Government announced plans to introduce new legislation to strengthen the government’s existing powers to scrutinise and intervene in transactions on national security grounds. The government has indicated that the proposed legislation will create a UK-wide notification system for transactions which may have security concerns and give the government powers to apply conditions to a transaction, or to block it altogether. Interestingly, the UK recently and controversially agreed to allow Huawei to have a restricted role in building Britain’s 5G network notwithstanding intense lobbying from the US Government to ban Huawei involvement. + Japan has expanded the scope of sensitive sectors for which notification is required – covering an additional 20 new industries including software relating to information processing. The government has also approved further restrictions on foreign investment on national security grounds, including lowering the threshold in sensitive companies from the current 10% to 1% (which will take effect from April 2020). + China has also introduced a unified foreign investment screening regime (replacing three existing regimes), which includes the establishment of a national security review regime.
20 Public M&A transactions in 2019 Foreign bidder activity in 2019 was broadly in line with the long-term average in terms That said, when one considers the largest of deal volume, slightly decreasing to around 56% of public M&A transactions over public M&A transactions last year, the $50 million being made by foreign bidders from 59% in 2018. One could say this was importance of foreign investment remains the second annual decrease in a row in terms of volume, but then this just takes us clear. All public M&A transactions in 2019 back to where we were in 2015 (which was also above 2016). So, we think it is another with a value of $1 billion or more involved year which is consistent with the long term average of between 50% and 70%. foreign bidders. The largest foreign bidder transactions in 2019 were: Foreign bidders by number of transactions + Brookfield’s $4.4 billion acquisition of 80% Healthscope; 70% 63% + Nippon Paint’s $3.8 billion acquisition 59% 60% 56% 54% of DuluxGroup; 50% 49% + BGH Capital consortium’s $2.1 billion 40% acquisition of Navitas; 30% + China Mengniu Dairy Company’s 20% $1.5 billion acquisition of Bellamy’s 10% Australia; 0% + EQT’s proposed $1.4 billion acquisition 2015 2016 2017 2018 2019 of Metlifecare; and However, the same cannot be said in terms of aggregate transaction value. + Brookfield’s $1.3 billion acquisition of The value of foreign investment decreased significantly in 2019 compared to 2018, Aveo Group. with a reduction of more than $23.3 billion in foreign investment to a total of It was a busy year for Brookfield in $19 billion. In fact, the value of foreign investment in 2019 was lower than in 2016. that it was responsible for two of the top foreign bids. BGH Capital was also Foreign bidders by value involved in two of these transactions, with BGH Capital and AustralianSuper 2016 23.8 making the initial approach for Healthscope. While the principals of 2017 36.7 BGH Capital are Australian based, we have categorised the BGH Capital 2018 42.3 consortium acquisition of Navitas as foreign due to its foreign consortium members and investors and the need for 2019 19.0 FIRB approval, which is not uncommon with private equity backed bids. 5 10 15 20 25 30 35 40 45 $ billions
21 Where did the bidders come from? As illustrated in the world map (below), in 2019 foreign bidders came from a range of continents and jurisdictions including Asia, North America, the UK, Sweden and New Zealand. However, when you break it down some more, there are some interesting themes in this: + North America, that is the US and Canada, with six deals each, + Japan has had a resurgence in acquisitions of Australian continues to dominate foreign investment. The increase in companies, perhaps driven by low cost debt and also low growth transactions involving North American bidders was largely due in Japan; to active Canadian pension funds seeking to invest in Australia, + While China has had a reduced interest in Australia in recent particularly in infrastructure, real estate and adjacencies; times, Chinese companies still had two successful acquisitions in + Asian bidders came from a variety of countries including Japan, 2019; and South Korea and China; + European investors were behind three transactions.
China: Hong Kong listed China Mengniu Dairy Company’s $1.5 billion acquisition of Bellamy’s : EQT’s Australia Sweden Canada: Brookfield’s proposed Shanghai listed Chengtun $4.4 billion acquisition $1.4 billion Mining Group’s $109 of Healthscope and 29% acquisition of 7% million acquisition of $1.3 billion acquisition Metlifecare Nzuri Copper of Aveo Group
NORTH Japan: Nippon Paint’s AMERICA EUROPE 15% $3.8 billion acquisition of DuluxGroup UK: FNZ’s $268 million contested acquisition ASIA 5% US: The acquisitions of GBST Holdings of Credible Labs Inc Shell’s $617 million AP Eagers’ $836 million takeover OTHER ($585 million) and acquisition of ERM of Automotive Holdings Gazal Corporation 44% BGH Capital consortium’s ($268 million) Power Wesfarmers Lithium’s $769 million $2.1 billion acquisition of Navitas AFRICA acquisition of Kidman Resources SOUTH Grafton Health’s $107 million AMERICA acquisition of Orion Health AUSTRALIA
22 Proportion of bidders by region over time Foreign bidders’ success rates 60% Australia reach new high 50% North America Foreign bidder success rates in public M&A 40% transactions reached their highest in the Asia 30% time we have been publishing our Review Europe (almost 10 years). 20% Other 10% 95% OF ALL ANNOUNCED Africa PUBLIC DEALS OVER $50 0% 2014 2015 2016 2017 2018 2019 MILLION INVOLVING FOREIGN BIDDERS As was the case in 2018, foreign bidders made up a larger share of the public SUCCESSFULLY COMPLETED. M&A transactions from a transaction value perspective (compared to transaction THIS WAS ABOVE 2018’S number). While North American bidders accounted for 29% of transactions by number, they accounted for 36% of aggregate transaction value. Similarly, while SUCCESS RATE OF 76% AND Asian bidders accounted for 15% of transactions by number, they accounted for OUTDID THE PREVIOUS 25% of aggregate transaction value. HIGH OF 92% IN 2016. However, it is also interesting to see that Australian bidders accounted for 21% of the That said, this higher success rate may aggregate transaction value in 2019, increasing from just 14% in 2018. in part be reflective of the way deals are done today. That is, there is a general Given the ongoing subdued Chinese outbound direct investment and the trend away from hostile/unsolicited bids continued (Australian government and media) sensitivity towards Chinese to friendly/agreed transactions and also a foreign investment, and the increase in private equity bids (with readily available general increase in confidential non-binding pension/superannuation and debt funding), it will be interesting to see if there is a indicative offers which may not become continued shift away from Asian to North American bidders. public if rejected.
The largest number of foreign bidders from individual countries were: Foreign bidder success rates
2014 80% Canada UK 6 deals 2015 67% 2 deals United States China 2016 92% 6 deals 2 deals Japan 3 deals 2017 74%
THE KEY FOREIGN PLAYERS IN 2019 WERE NORTH 2018 76% AMERICAN BIDDERS, WITH THE DECREASE IN ACTIVITY 2019 95% OF CHINESE BIDDERS OVER THE LAST TWO YEARS CONTINUING IN 2019
23 5 CONSIDERATION TYPES
Use of cash consideration at an Combination consideration all-time high There were no transactions which had a 83% of transactions in 2019 gave target consideration structure which offered target shareholders the option to receive all cash shareholders a fixed combination of both consideration, up from 71% of transactions in cash and scrip with no all cash alternative. 2018. This is the highest percentage we have This was down from 8% of transactions identified in the past ten years. It may, in part, announced in 2018 which offered a be attributable to the increased activity of combination of cash and scrip. private equity bidders, and the relatively cheap debt funding available to bidders. HOWEVER, THERE WERE FIVE TRANSACTIONS Schemes remained the preferred structure for cash transactions, making up 88% of WHICH GAVE Cash reigns supreme! transactions offering all-cash consideration. SHAREHOLDERS THE The preference for cash Interestingly, only 57% of takeover bids offered OPTION TO ELECT consideration amplified in solely cash, down from 82% in 2018 (marking a EITHER SCRIP OR CASH 2019, with the percentage of continued decline in all-cash bids from 2017). transactions comprising all- CONSIDERATION Once again, consistent with 2018, there was a cash consideration This included the successful acquisition by preference for the certainty of cash among the INCREASING TO Sandfire Resources of MOD Resources via larger transactions: the largest five successful scheme of arrangement, which offered the transactions announced in 2019 offered all-cash 83% option to elect either scrip consideration of consideration as a possible election. 0.0664 Sandfire share for every 1 MOD AP Eagers’ $836 million acquisition of share or cash consideration of A$0.45 per THERE WERE Automotive Holdings Group was the largest MOD share, subject to an aggregate cash NO TRANSACTIONS transaction using a scrip consideration structure. cap of $41.6 million. WHICH OFFERED TARGET SHAREHOLDERS A FIXED COMBINATION OF BOTH Types of consideration by number of transactions CASH AND SCRIP. 100% 8% 8% 21% 13% 15% 17% 80% 22% 13% 15% 21% 18% 60% 83%
40% 71% 70% 74% 70% 61% 20% STUB EQUITY CREATIVITY REMAINED 0% 2014 2015 2016 2017 2018 2019 UNDER THE SPOTLIGHT. Cash Scrip Combination
24 Stub equity creativity under the spotlight Anecdotally, there were many conversations with potential bidders in Two transactions in 2019 involving Brookfield sought to provide flexibility for all target the first half of 2019 about stub equity shareholders by incorporating a stub equity option into the consideration structure as follows transactions. Brookfield’s acquisition of Aveo Group was an example where BROOKFIELD'S ACQUISITION OF all shareholders had a chance to exchange their Aveo shares for shares Healthscope Aveo Group in the private equity bidding vehicle. BY SCHEME OF ARRANGEMENT BY SCHEME OF ARRANGEMENT The Navitas transaction offered scrip in the bidder’s HoldCo, although only $2.50 cash per target share. Healthscope $2.195 cash per target share inclusive of to consortium members who held shareholders could elect to receive shares a $0.045 dividend. Aveo shareholders target shares. in the Bidco parent if more than 10% of could elect to receive units in a Bermudan Healthscope shareholders elected the limited partnership which would hold class In June 2019, ASIC proposed in scrip option. There was a cap on these B shares in the TopCo if more than 10% Consultation Paper 312 significant elections representing 45% of the total of Aveo shareholders elected the scrip restrictions to address its concerns issued share capital of Bidco, with a pro option. There was cap on these elections that certain stub equity structures rata scale back mechanism to apply if the representing 30% of the total issued share run counter to the underlying policy cap was reached. Ultimately, less than capital of TopCo, with a pro rata scale back provisions governing proprietary 0.01% of shareholders elected the scrip mechanism to apply if the cap was reached. companies (ie their shares are generally option, and so no scrip was issued. Ultimately, 16.9% of shareholders elected required to be closely held and they scrip and none were scaled back. are subject to lower disclosure and governance requirements than public companies) and deny retail investors important protections. A further two transactions sought to provide scrip consideration to select shareholders (management/consortium members), who formed a separate class of Submissions were made by G+T shareholder when voting on the scheme of arrangement. and others that existing disclosure exemptions are appropriate and that PVH’S ACQUISITION OF BGH’S ACQUISITION OF requiring a public company structure would result in bidders using a foreign Gazal Corporation Navitas entity as the acquisition vehicle taking it outside the application of BY SCHEME OF ARRANGEMENT BY SCHEME OF ARRANGEMENT the Corporations Act where fewer $6.00 cash per target share, however Cash of $5.825 per target share, however protections for retail shareholders certain members of management were consortium members who held target may be available. As at the date of this required to rollover their shares in Gazal shares rolled over their shareholdings into publication, ASIC has not released into shares in the BidCo parent. HoldCo shares. anything further on its proposals in this regard.
25 Consideration structures
$228 million $320 million $836 million $86 million $167 million $617 million Echo Resources Panoramic Automotive $4.4 billion URB MOD Resources ERM Power / $2.1 billion / Northern Star Resources / Holdings / AP Healthscope / Investments / / Sandfire Shell Energy Navitas / BGH Resources Independence Eagers Brookfield 360 Capital Resources Group $200M $400M $600M $800M $1B $5B+
$769 million $109 million $192 million $421 million Kidman $1.3 billion Nzuri Copper $268 million $3.8 billion Xenith IP QMS Media / Resources / Aveo Group / / Chengtun Gazal / PVH Dulux / Nippon Group / IPH Quadrant Wesfarmers Brookfield Mining Paint Lithium Cash Scrip Equity to select shareholders Stub equity
Sources of funding Sources of funds The chart (right) shows that the cash 77% 82% 79% 62% consideration for public M&A came from 40% 41% a variety of sources. While the majority of bidders continue to fund their acquisitions 9% 8% 6% using at least a portion of existing capital, the number of transactions establishing New acquisition Existing reserves / facilities Equity capital raising new acquisition facilities (predominantly, corporate facilities secured debt facilities) increased from 2017 2018 2019 41% in 2018 to 62% in 2019. It seems that For example: bidders are much more prepared to borrow to undertake acquisitions and is likely to also + Healthscope / Brookfield reflect the increased number of private equity $4.4 billion funded from existing cash reserves and senior secured syndicated transactions. facilities as well as bridging finance Larger deals continue to use a mix of funding + DuluxGroup / Nippon Paint sources. $3.8 billion funded by a new unsecured debt facility Interestingly, there has been a continued + Navitas / BGH Capital consortium decline in the proportion of bidders $2.1 billion funded by existing cash reserves and new secured debt facilities undertaking equity capital raisings to fund + Bellamy's Australia / China Mengniu Dairy Company their acquisitions. $1.5 billion funded by term loan facility
26 6 SUCCESS FACTORS
Significant increase in success rates Takeovers and schemes equally successful 89% of all concluded public M&A transactions over Success rates were broadly similar for schemes and takeovers in $50 million were successful in 2019. This represents an 2019, with 90% of schemes and 86% of takeover bids (with a increase over the success rate in 2018 of 80%. transaction value exceeding $50 million) delivering a successful High value transactions (ie those valued above $500 million) outcome. In comparison to 2018, this reflects a higher success enjoyed a 100% success rate, significantly up from 76% in 2018 rate for schemes (72% in 2018) but a lower success rate for (and the highest we have observed since 2014). Transactions takeovers (94% in 2018). ranging from $50 million to $500 million were less successful in 2019, falling from 82% in 2018 to 77% in 2019.
Success rates Success rates for takeovers v schemes 100% 100% 91% 89% 90% 85% 83% 82% 80% 80% 80% 76% 77% 94% 70% 2018 70% 62% 72% 60% 50% 40% 86% 2019 30% 90% 20% 10% 0% 2016 2017 2018 2019 0% 20% 40% 60% 80% 100% $50m to $500m $500m+ All $50m+ Scheme Takeover The success rate for 2019 does not include four transactions which were current at 1 March 2020. The success rates for 2016 to 2018 have been updated to reflect the ultimate outcome of all transactions which were analysed in those past Reviews.
It is interesting to consider the circumstances in which Breach of defeating conditions, lack of major transactions were not successful in 2019: shareholder support and adverse board recommendation (notwithstanding favourable independent expert’s report) Transactions not approved by requisite majorities of shareholders + Independence Group’s proposed acquisition of + Charter Hall / Abacus’ proposed acquisition of Australian Panoramic Resources by takeover Unity Office Fund Particularly noteworthy is that three of the four unsuccessful + Seven West Media’s proposed acquisition of Prime Media Group transactions in 2018 were board-recommended schemes, Adverse independent expert’s report following a board two of which were voted down by shareholders. This is recommendation a timely reminder of the importance of ensuring key + PharmaCielo’s proposed acquisition of Creso Pharma by scheme shareholders are supportive of the transaction.
27 Friendly transactions enjoy significantly Decrease in premiums higher success rate The average final premium paid by bidders has decreased to In 2018, we were somewhat surprised to see hostile takeovers 39% in 2019 after a five-year high of 50% in 2018. This makes enjoy higher success rates than friendly transactions (83% vs the 2019 result more consistent with the size of premiums 79%). in years prior to 2018. That being said, the data for 2018 was significantly skewed by five transactions featuring premiums of In 2019, we saw a return to normal – significantly higher more than 100%, two of which were more than 200%. When success rates for friendly transactions (91%) as compared we exclude those outliers, average premiums in 2018 would to hostile takeovers (50%). That said, it is relevant to note have been 36%, which is slightly below 2019 levels. that there were only two hostile bids in 2019, with one being successful (AP Eagers’ bid for Automotive Holdings Group) Perhaps counter-intuitively, despite the drop in premiums in 2019 and the other one unsuccessful (Independence Group’s as compared to 2018, success rates were up on the prior year. bid for Panoramic Resources). So, in respect of hostile More conventionally, it makes sense that the premiums in three takeovers, the data is a product of a very small sample size. of the four unsuccessful transactions in 2019 were 15% or below, making them among the lowest of all transactions in the data set.
Success rates for friendly and hostile transactions Average premiums paid 100% 100% 91% 88% 60% 90% 83% 79% 80% 76% 55% 70% 67% 51% 50% 60% 50% 50% 50% 50% 43% 45% 40% 40% 41% 30% 40% 39% 20% 35% 33%
10% paid % premiums Average 0% 30% 2015 2016 2017 2018 2019 2017 2018 2019 Friendly Hostile All $50m+ transactions $500m+ transactions
Transactions by final premium grouping 10 10 8 8 6 4 4 4 4 3 Deal count Deal 2 1 1 1 0 0 0% to 10% 10% to 20% 20% to 30% 30% to 40% 40% to 50% 50% to 60% 60% to 80% 80% to 100% 100% to 130% 130% & above
28 Only one deal from 2019 featured in the list of the highest 10 The top 5 five premiums for 2019 were paid in the following premiums offered over the past five years, being the 141% paid by successful transactions (all structured as schemes of Advanced Personnel Management for Konekt. arrangement):
Top 10 transactions by premium offered in past five years Top five premiums offered in 2019
275% 1 PT Bayan Resources TBK’s successful $515 million acquisition 141% of Kangaroo Resources by scheme of arrangement Advanced Personnel Management’s 233% $74 million acquisition of Konekt 2 Zijin Mining Group’s proposed $90 million takeover bid for Nkwe Platinum 213% 3 TIO’s successful $73 million takeover bid for Flinders Mines 95% FNZ Group’s $268 million 177% acquisition of GBST Holdings 4 Merck & Co’s successful $502 million acquisition of Viralytics by scheme of arrangement 142% 5 Hancock Prospecting’s successful $426 million takeover bid for Atlas Iron 73% 141% IPH’s $192 million acquisition of 6 Advanced Personnel Management’s successful $74 million Xenith IP Group acquisition of Konekt by scheme of arrangement 130% 7 Tetra Tech’s successful $109 million takeover bid for Coffey International
129% 59% 8 Coal of Africa’s unsuccessful $126 million takeover bid for China Mengniu Dairy Company’s Universal Coal $1.5 billion acquisition of Bellamy’s Australia 120% 9 Oz Minerals’ successful $418 million takeover bid for Avanco Resources 100%
Auctus’ successful $56 million takeover bid for Atherton 57% 10 PSP Investment’s $724 million Resources acquisition of Webster 2019 2018 2017 2016 2015
29 Pre-bid stakes on the decline Types of pre-bid arrangements The proportion of transactions featuring a pre-bid stake fell As in the past few years, holdings of actual shares remained to 46% in 2019 (down from 49% in 2018), the equal lowest the most common form of pre-bid stake, followed by pre- result since we have been publishing this Review. bid agreements with shareholders. The move away from cash settled equity swaps observed in 2018 has continued, with no These transactions included both takeovers and schemes and bidder in 2019 using this type of instrument (or at least insofar deals ranging in value from $50 million to $2 billion. 71% of as one can tell from public disclosures). takeover bids involved a bidder who held (or acquired) a physical pre-bid holding in the target, while only 24% of schemes involved It is worth noting, however, that NorthWest Healthcare the acquirer holding a physical pre-bid stake. Interestingly, pre-bid Properties REIT, which was a key stakeholder in the stakes also featured in two unsuccessful transactions – Charter Healthscope transaction, acquired a significant holding in Hall / Abacus’ proposed acquisition of Australian Unity Office Healthscope via a swap. Ultimately, this allowed NorthWest Fund by scheme, and Independence Group’s proposed acquisition to leverage into the overall transaction, enabling it to buy of Panoramic Resources by takeover. Healthscope properties from the successful acquirer in conjunction with the scheme. Taken together, is the data telling us that pre-bid stakes are becoming less important to delivering a successful outcome? We expect not given the clear benefits of acquiring a pre-bid stake in most transactions, but it is one we will continue to monitor closely. Transactions featuring pre-bid stakes Types of pre-bid arrangements (2019)
80% Equity Pre-bid Pre-bid agreement 70% derivative shareholding with shareholders 59% 60% 56% 51% 49% 50% 46% 46% 40% 0% 68% 32% 30% 20% 10% % of transactions in 2019 with a pre-bid stake 0% Note that in some transactions, the bidder had more than one type of pre-bid stake. 2014 2015 2016 2017 2018 2019
30 7 TRANSACTION TIMING
Takeovers still provide a faster route...usually While it is always possible for takeovers to complete more quickly than a scheme of arrangement if shareholders accept quickly, until recent years, there had in actual fact been no strong advantage timing-wise between takeovers and schemes. Between 2018 and 2019: We consider that this difference has However, in 2017, takeovers on arisen due to an evolution of the strategy + the average time to complete a scheme average became significantly quicker to as to when a bidder might consider increased slightly by three days; implement than schemes. This differential using the takeover procedure. That between takeovers and schemes has since + the average time to complete a is, this emergence of takeovers as a remained. During the last three years, takeover reduced by 18 days; and materially shorter process has coincided takeovers were on average around 42 + takeovers retained a material time with the emergence of schemes as days quicker to complete than schemes. advantage, closing on average 51 days being the much-preferred method of earlier than schemes during the year. implementing a control transaction. Essentially, friendly Australian public However, it should be noted that the company control transactions are now Average days to end of takeover offer data for takeovers is a little skewed by the implemented by a scheme, unless there vs scheme implementation date inclusion of a takeover of an ASX listed, is a particular reason why a takeover but New Zealand incorporated entity, should be preferred. And one of those Orion Health Group. This takeover was reasons is that the circumstances of the completed in 12 days (which would not 2019 company – whether that be the bidder actually be possible under Australian 78DAYS starting from a control position, or the 129DAYS law). Stripping that transaction out of composition of the register suggesting a the data, the average days to the end of number of significant shareholders being the takeover offer in 2019 would be 90, open to accept quickly – creates the which would be a six-day reduction in possibility of the deal being concluded 2018 the average time taken since 2018, and a in shorter time. Therefore, use of the 96DAYS 126 widening of the average time differential DAYS takeover procedure has been subject to between a takeover and a scheme from an almost “self-selection” of deals able 30 days in 2018 to 39 days in 2019. to be implemented more speedily. In 2017 Regardless, the position from the the years where transaction structures previous couple of years has been were more equally balanced between 69DAYS 115DAYS maintained – takeovers still took takeovers and schemes, there was no materially less time to implement on material difference between the two Takeover Scheme average than schemes. from a timing perspective.
31 Takeovers It is worth noting, however, that not all takeovers in 2019 were completed in a short time. The takeover of Automotive Holdings As stated above, last year there was a shortening in the time Group took 164 days because of ACCC concerns, and the taken for a takeover from announcement to close of the offer takeover of Egan Street Resources took 136 days due to the - from 96 days in 2018 to 78 days in 2019. As also discussed, existence of competing bids. when the Orion Health Group transaction is removed from the data set, the period for 2019 actually becomes 90 days, which is While the average time for a takeover was 78 days, the median a reduction, but not a significant one, from the previous year. was actually 63 days. Other statistics worth noting are: In previous years, we have assessed the impact of having a pre- bid stake on the time taken to complete a takeover. Generally, + a slight increase (of three days) in the average initial offer other than in 2017 (where the outcome was skewed by there period to 61 days; and being only being one deal that proceeded to completion without + a significant reduction in the average time by which the offer a pre-bid stake), deals where the bidder held a pre-bid stake had period was extended from 38 days to 17 days. a distinct advantage in closing more quickly.
Timing in takeovers Days to close of takeover bid: impact of pre-bid stake 120 180 99 96 160 158 100 92 89 140 20 18 36 78 125 126 80 69 38 120 17 110 60 18 100 90 92 78 80 70 75 71 40 Number days of 60 44 Number days of 72 71 63 51 58 61 40 20 20 0 0 0 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Initial offer period Extended offer period Takeovers with a pre-bid stake Takeovers without a pre-bid stake
The marginal increase in the initial offer period has no However, what is interesting about this year’s data is that we are significance in our view. It is just reflective of expected variances unable to do that comparison. in the data set. The marked reduction in the average period for extensions IN 2019, THERE WERE NO to the offer period reinforces our view that the reductions in time periods for takeovers is a function of the reduced use of TAKEOVER BIDDERS WHICH takeovers to implement control transactions. The deals that are STARTED THEIR BID WITHOUT being implemented by takeover are, in their nature, more able to be consummated quickly. A PRE-BID STAKE
32 Schemes of arrangement As shown below, the time period between announcement of a scheme and its implementation date has been relatively stable over the last six years. This is obviously to be expected in the context of such a regulated process.
Timing in schemes 140 129 126 120 116 114 115 108 21 32 21 100 15 28 19 105 80 97 95 96 93 60 86 Number days of 40 20
0 2014 2015 2016 2017 2018 2019 Days to scheme meeting Days to implementation
More than three quarters (76%) of all successful schemes announced during 2019 took between 80 – 130 days from announcement to the scheme implementation date when excluding the two outlier deals which faced significant regulatory delays (discussed below). This reinforces the general “rule of thumb” of between three to four months to implement a scheme. Unsurprisingly, delays in obtaining necessary regulatory approvals were involved in the two schemes that took the longest period of time to implement. The acquisition of Ruralco by Canada’s Nutrien required both FIRB and ACCC approvals and the acquisition of Nzuri Copper by Chengtun Mining Group required Chinese government approvals.
33 8 IMPLEMENTATION AGREEMENTS AND BID CONDITIONS
Implementation agreements Break fees Implementation agreements continued to be a standard feature Again in 2019, target boards routinely agreed to pay break fees in of agreed transactions in 2019. agreed transactions on the occurrence of certain trigger events, including a change in recommendation by the target board or Only two of the 38 recommended transactions in 2019 did not material breach of the implementation agreement by the target. involve an implementation agreement. Each of these transactions was structured as a takeover bid, with the bidder having a For the most part, the quantum of break fees stayed within the significant pre-existing shareholding or pre-bid stake. Arguably, Takeovers Panel’s 1% guidance (based on the target’s equity these circumstances reduced the likelihood of interlopers and value). One notable exception was the scheme transaction in therefore made it less important to obtain the benefit of the respect of the acquisition of Pioneer Credit, where Pioneer protections and rights included in an implementation agreement. agreed to a break fee of 1% of its enterprise value ($287 million), which represented 2.4% of equity value ($120 million). Deal protection measures This shows that, where a target company is highly geared, it In addition to standard obligations on the target board to may be permissible to base the 1% threshold on enterprise value recommend the transaction to shareholders (in the absence of a rather than equity value (as contemplated in the Takeovers superior proposal and, where applicable, subject to a favourable Panel’s guidance). However, where this approach is adopted, independent expert’s report), implementation agreements it will be particularly important to be able to demonstrate that in 2019 continued to include the usual suite of exclusivity the break fee is a reasonable pre-estimate of the bidder’s actual provisions in the vast majority of agreed transactions, namely: costs. The first Court hearing in respect of the Pioneer Credit + restrictions on the target soliciting competing proposals (ie scheme is due to be held in mid-March 2020, and it will be no-shop) and talking to potential competing bidders unless interesting to see whether ASIC or the Court have a view on approached with a potentially superior proposal (ie no-talk); the quantum of the break fee. + obligations on the target to notify the bidder if it receives a Continuing the trend of recent years, 49% of transactions competing proposal (ie notification obligation); and valued over $50 million featured a reverse break fee in 2019. This figure was slightly down on the previous three years, where + matching rights in favour of the bidder if a superior proposal the outcome was 54%, 52% and 58%, respectively. Reverse emerges, giving the bidder an opportunity to match the break fee triggers included: superior proposal before the target board can change its recommendation. + failure to satisfy conditions relating to regulatory or shareholder approvals required by the bidder; and Frequent deal protection mechanisms + material breach of the implementation agreement by the bidder. 100% 97% 97% 97% 97% 95% 95% In nearly all cases, the quantum of the reverse break fee was the 93% 93% 92% 93% same as the break fee payable by the target. A notable exception 90% 90% was Brookfield’s acquisition of Healthscope. In that transaction, 86% Brookfield agreed to pay a reverse break fee of $129 million if Healthscope terminated the transaction for material, unremedied 80% breach of the implementation agreement by Brookfield. This No Shop No Talk Break Fee Matching Right represented three times the break fee payable by Healthscope 2017 2018 2019 in equivalent circumstances (and on other customary trigger events). 34 Bid conditions A range of bid conditions were included in the off-market takeovers and schemes announced in 2019.
Frequency of conditions 98% 100% 98% 100% 86% 86%
56% 46% 43% 39% 38%
17% 14% 18% 14% 0% 5% 3% No legal restraint FIRB ACCC Stock market 3rd party No material / prohibition condition approval fluctuation consent adverse change
All transactions Takeovers Schemes
Material adverse change (MAC) Minimum acceptance conditions Unconditional bids 100% of all schemes had MAC conditions, 71% of all off-market takeover bids There was only one unconditional as did 86% of off-market takeovers (up had a minimum acceptance condition, takeover in 2019 – Grafton Health’s compared to 91% for schemes and 80% for which was broadly consistent with 2018. bid for Orion Health. However, the off-market takeovers in 2018). In agreed/ Notably, AP Eagers’ $836 million scrip bidder had a pre-existing shareholding recommended transactions, it is becoming bid for Automotive Holdings Group of above 90%, so in a substantive sense, less a question of whether there will be did not contain a minimum acceptance bidders were less willing to proceed on an a MAC, but rather what the MAC will condition despite being conditional unconditional basis in 2019 as compared look like, with the triggers and exceptions on various other matters (including to previous years (where there have generally the subject of much negotiation. regulatory and third party approvals). generally been a handful of unconditional While the triggers are more often than not This, however, can be explained by the bids). based on falls in EBITDA and net assets, fact that AP Eagers was already the there are a range of other triggers that are largest shareholder in AHG. sometimes used including falls in revenue and increases in net indebtedness.
35 HIGHLIGHT: BATTLE OF THE NON-BINDING BIDS
One of the more interesting transactions during 2019 was the “battle” for GBST, an ASX listed company offering specialist administration and transaction processing software predominantly for retail wealth management organisations and global and regional investment banks.
“Bidding war” between Bravura, FNZ and SS&C 12 APRIL 19 JUNE 24JUNE 26 JUNE Bravura $2.50 Bravura FNZ shows GBST opens limited $2.72 interest sale process
3 JULY 1 JULY 30 JUNE 28 JUNE 27 JUNE SS&C FNZ GBST and SS&C enter FNZ $3.15; Bravura $3.00 $3.60 $3.50 exclusivity deed at $3.25 SS&C $3.25
5 JULY 8 JULY 8 JULY 29 JULY OCTOBER FNZ GBST rejects FNZ commences FNZ and GBST Scheme implemented $3.65 FNZ Panel proceedings agree $3.85 and GBST delisted
In April 2019, GBST received an unsolicited non-binding GBST was then approached by the FNZ Group to engage indicative proposal from Bravura to acquire GBST at a price of in discussions in respect of acquiring GBST. Following such $2.50 per share, which was rejected by GBST. Bravura followed approach, GBST decided to undertake a limited sale process that up on 19 June 2019 with a revised indicative proposal of where interested parties were given an opportunity to secure $2.72. This followed a limited engagement between the two access to due diligence on an exclusive basis by being invited to parties, which involved a management presentation by GBST. submit indicative proposals by 3 July 2019.
36 Before that date however, Bravura further increased its “indicative” bidding war to progress at least one of the indicative indicative proposal to $3.00 per share, conditional on GBST proposals to a binding offer and to secure the attractive premiums entering an exclusivity deed with it by 4.00pm on 28 June being offered for GBST shareholders. The formal process, and 2019. Importantly, this was prior to the time set for indicative entry into the exclusivity deed with the successful participant in proposals in the GBST sale process. In doing so, Bravura had that process, SS&C, was intended to rule that line. sought to force GBST’s hand by accepting the bird that was in However, FNZ had other ideas, and on the same day that GBST the hand, rather than those potentially in the bush. announced the exclusivity deed with SS&C, FNZ submitted a GBST responded by bringing the deadline on the limited further non-binding indicative proposal at $3.50 per share, on competitive process forward, on several occasions, and the basis that SS&C would not have yet been given diligence ultimately to 2.00pm on 28 June 2019 (the date set by Bravura access and allowing GBST to rely on its fiduciary carve-outs to on which its indicative proposal would be withdrawn). its exclusivity obligations. Non-binding indicative proposals were submitted by FNZ (at Two days later, on 3 July 2019, SS&C further increased its $3.15 per share) and a US-listed company, SS&C, at $3.25 indicative proposal to $3.60 and SS&C commenced its diligence. per share. On 30 June 2019, GBST and SS&C entered into an On 5 July 2019, FNZ announced a further increase in its indicative exclusivity deed containing customary exclusivity provisions (eg proposal to $3.65. So, despite its best efforts, the formal process no shop, no talk and no due diligence restrictions), subject to a run by GBST had failed to end the indicative bidding. fiduciary duty carve-out. Interestingly, the deed also provided for SS&C to pay to GBST a form of break fee if it did not On 8 July 2019, GBST announced that despite FNZ indicating proceed to a binding agreement with GBST on the terms of its a price $0.05 higher the SS&C’s, GBST had determined that it successful indicative proposal (other than for certain specified was in the best interests of GBST shareholders to continue to reasons). This was announced on 1 July 2019. facilitate the progress of a binding offer from SS&C reflecting the terms of its last proposal and which is capable of being GBST regarded certain information it would need to provide to put to shareholders. Essentially, GBST had determined - for a bidder during due diligence would be commercially sensitive, reasons relating to the scope of the diligence required by the more so to certain prospective bidders who it regarded as having parties, the impact on GBST’s commercial position of providing a greater competitive overlap in their operations. As a result, it diligence access to FNZ which did not result in a binding offer only wanted to allow one party to proceed to diligence. However, from FNZ, SS&C’s exclusivity break fee and other provisions the dilemma it had was how to secure a bid that was actually of FNZ’s proposed exclusivity deed − that the proper discharge binding while the various parties kept increasing their non-binding of its fiduciary duties did not require it to breach its obligations indicative proposals. It needed to try and rule a line under the under the exclusivity deed with SS&C. GBST stated that: “IT SEES LITTLE BENEFIT FOR SHAREHOLDERS IN RECEIVING FURTHER NON-BINDING, INDICATIVE AND INCOMPLETE PROPOSALS, OR IN ENGAGING IN AN INDEFINITE BACK AND FORTH PROCESS OF REVISED NON-BINDING INDICATIVE PROPOSALS THAT PROVIDE NO GREATER LEVEL OF CERTAINTY FOR GBST SHAREHOLDERS”
GBST had tried once again to rule a line under the “indicative” bidding war.
37 Takeovers Panel Proceeding But again, FNZ had had other ideas. + Target directors were encouraged to negotiate deal protection mechanisms and not necessarily accept measures On GBST’s announcement, FNZ made an application to the as “market practice”. Takeovers Panel that the conduct of GBST had constituted unacceptable circumstances. In essence, it contended that The issue as to whether an exclusivity deed should be disclosed the process and actions of GBST meant that the potential in full, or whether a summary would be sufficient, was also acquisition of control of GBST was not taking place in an considered but the issue was not determined. The Panel efficient, competitive and informed market. acknowledged that its policy provides that the “existence As a preliminary matter, the sitting President of the Panel and nature of any lock-up device should normally be disclosed”. determined not to grant FNZ’s interim application for an order ASIC, however, submitted its strong view that the exclusivity requiring GBST to cease providing diligence access to SS&C. deed should be disclosed in full. The Panel did not need to determine the issue as GBST and SS&C agreed to release the On FNZ’s substantive application, the Panel also decided to not deed in full, but the Panel did say it was minded to conduct conduct proceedings. However, in reaching this determination, proceedings to consider the issue (in the absence of GBST’s the Panel provided certain useful guidance: voluntary disclosure), although it “remains an open question in + The impact on the commercial position of the target of the what circumstances it may be sufficient to disclose a summary of a provision of due diligence to a certain party (as compared to process deed instead of the deed itself”. If in the future parties to the provision to other parties) is a valid consideration that a transaction just disclose a summary rather than an exclusivity may support different treatment of potential bidders. deed itself, they should probably expect a call from ASIC, and potentially end up being taken to the Panel. + It is reasonable for a board to receive valuable undertakings FNZ ultimately wins the day... as do GBST shareholders! from prospective bidders in exchange for giving access to company information, and that the undertakings required And how did this all end up for GBST? may vary between alternative bidders. Well, FNZ returned several weeks later, submitted a higher + The Panel will not readily second-guess a target board’s binding bid (albeit subject to limited due diligence) at $3.85 decisions taken after receiving independent legal and per share, which SS&C did not match. FNZ used a relatively financial advice (including in respect of decisions to enter into unusual technique of “exploding” offers where the price they exclusivity arrangements with a prospective bidder). While offered reduced incrementally if it had not been accepted the Panel found that the process adopted by GBST was not by certain deadlines. SS&C chose not to match the higher conventional, it also was not unacceptable, and indeed, had price, and the scheme under which FNZ acquired GBST was been successful in achieving significantly improved outcomes successfully implemented in late October 2019. for GBST shareholders. And the big winners were clearly GBST shareholders, receiving a valuation on their shares almost double the value prior to the + The Panel adopted a principles-based approach to deal original approach by Bravura. protection mechanisms (including countenancing that an absence of a fiduciary out may not necessarily be unacceptable in all circumstances) rather than the form of prohibition adopted in the UK.
38 9 THE REGULATORS
Schemes of arrangement ASIC Director benefits and recommendations It is undeniable that ASIC had an extremely busy 2019 and it promises to be the same A key area of focus for ASIC in 2019 was director recommendations where for 2020. the directors will receive payments or other benefits if a scheme is approved by shareholders and the Court. This has also been the subject of some scrutiny by However, it is fair to say that its main areas the Courts. of focus have not included M&A. Other matters have attracted greater attention ASIC and the Courts have, at a minimum, required extensive and more from the corporate regulator, including: prominent disclosure of the benefits directors may receive if a scheme is approved. These benefits may include early vesting or acceleration of employee + the ongoing fall-out from the Financial options or performance rights issued to managing directors under employee Services Royal Commission (including incentive schemes, retention payments, transaction bonuses or additional dealing with criticism of ASIC); payments to directors for considering takeover bids. + an increasingly litigious approach by However, in some cases where a director receives a material benefit ASIC to resolving matters against in connection with the scheme’s implementation, the regulators have various financial services industry also called into question whether it is appropriate for a director to participants; make a recommendation on the transaction to shareholders. While the + analysis by ASIC’s corporate governance appropriateness of interested directors was considered in various decisions in taskforce on matters like executive 2019, the more recent decisions (Kidman Resources Ltd [2019] FCA 1226 and remuneration, approaches to non- Villa World Limited [2019] NSWSC 1207) suggest the preferable approach financial risk and corporate culture; and is that directors who will receive a benefit may still make recommendations + a review of audit quality. to shareholders as to how they should vote. That said, in each decision, the importance of fulsome and prominent disclosure in these circumstances was That said, the generally more aggressive reiterated. With respect, this is clearly the most sensible approach. and interventionist approach of ASIC in other areas has also carried over into Given the ongoing focus on these matters by ASIC and the Courts, there public M&A when it comes to formal is greater attention being given during deal negotiations to the benefits that review of transactions, particularly may be received by directors if the scheme is approved. schemes of arrangement and some enforcement action as well. However, it could be said that ASIC has been slow to follow through on real policy development or updates relating to M&A, for example, to its “Truth in Takeovers” regulatory guide. To be fair, perhaps “careful” and “more considered” might be alternative terms for ASIC’s approach here. We discuss some of these matters on pages 39 to 42.
39 Benefits and classes Disclosure matters As transactions increase in complexity, ASIC is also giving some ASIC’s focus on disclosure was not just limited to scheme focus to additional benefits particular shareholders (and their booklets, with disclosures made outside the scheme booklet affiliates) may receive if a scheme is approved. The question is, also coming under scrutiny. ASIC has emphasised that all of course: do the additional interests or benefits result in the communications with shareholders need to meet the standard relevant shareholder being in a separate class for the vote on the expected in the scheme booklet and, where appropriate, need scheme? Over many years, a practice developed in the Courts to be made in a formal supplementary statement. In this regard, to pragmatically deal with tricky judgement calls on these ASIC has been giving close attention to statements: matters involving the target company agreeing to separately + by the acquirer that it would not increase price; and account for, or tag, the votes of the relevant shareholders and, if those votes are determinative, the matter can be considered in + attributed to shareholders and proxy advisers as to how they greater detail at the second Court hearing. More often than not intend to vote (or how they have recommended the vote is clear cut, such votes are not determinative, and the shareholders vote). matter only gets a passing mention at the second court hearing. Substantial shareholder notices However, in the Brookfield acquisition of Healthscope by There are a range of practices when it comes to completing scheme of arrangement in 2019, ASIC considered that this substantial holder notices. The prescribed nature of the forms approach was not sufficient and was not supportive of the scheme is not always helpful, and disclosure is sometimes incomplete, proceeding without a different class being established. In this relevant documents not lodged and notices lodged late. transaction, NorthWest had previously acquired a strategic stake in Healthscope via an equity derivative, with the intention In this respect, ASIC may scrutinise the adequacy of required of pursuing the acquisition of certain real estate assets of disclosures. Some might say ASIC should do this more often Healthscope. Subsequently, in conjunction with Healthscope albeit the resources required to cover the field on this matter agreeing the terms of the scheme of arrangement with would be enormous. Brookfield, various arrangements were entered into in connection An example of ASIC pursuing this matter was the substantial with the proposed scheme (with the agreement of Brookfield, holder notice filed in connection with the equity derivative that Healthscope and NorthWest) which included the sale and NorthWest had entered into in connection with its interest leaseback of properties by Healthscope to NorthWest; assistance in Healthscope. As part of that transaction, NorthWest by NorthWest in the financing of the scheme; and agreement by entered into various agreements including sale and leaseback NorthWest that it would vote in favour of the scheme. arrangements, financing assistance and voting commitments. Given the magnitude and nature of the arrangements, ASIC ASIC raised concerns that a number of related agreements considered that NorthWest was in effect a joint proponent (that had been entered into with NorthWest entities at the of the deal and therefore NorthWest should form a separate same times as the agreement attached to the substantial holder class. Although the Court acknowledged ASIC’s concerns, it notice) were not attached to the substantial holder notice. ultimately took the view that a separate class was not required In response to ASIC’s concerns, a revised notice was filed in these particular circumstances. However, it noted that it attaching the relevant agreements. retained the discretion to discount or discard the NorthWest votes at the final Court hearing if it thought necessary. In the end, the votes cast by NorthWest were not determinative in approving the scheme.
40 Policy developments and updates…..or rather ongoing consideration of developments and updates Stub equity afforded the safeguards that the law explicitly provides for shareholders of public companies, ASIC is still considering its approach to and from which proprietary companies are stub equity in control transactions. exempt, including restrictions on related An offer of ‘stub equity’ occurs where party transactions, restrictions on conflicted scrip consideration is offered to target directors voting, the rules for the appointment shareholders as an alternative to cash and removal of directors and the requirement under a transaction typically involving a to hold annual general meetings. private equity bidder. These offers provide The issue was first raised in 2018 where ASIC an opportunity for target shareholders had concerns on some schemes. A formal to retain an economic exposure to consultation paper was issued in June 2019, the underlying business of the target where ASIC sought feedback on proposals to company through holding scrip in the limit offers of stub equity in the form of shares bidding, or holding, vehicle (HoldCo). in Australian proprietary companies to retail ASIC considered that a series of control investors. ASIC has received submissions, transactions including the Capilano Honey many critical of the proposals, and is currently scheme of arrangement in 2018 involving considering its response. Truth in Takeovers a proprietary HoldCo were structured We do not think that there is any need for to avoid the two main restrictions placed For some time now, ASIC has said further regulation here. The offer of stub equity on proprietary companies under the it is reviewing its ‘Truth in Takeovers’ gives the potential for upside to those investors Corporations Act, namely: Regulatory Guide 25 on false and that value it. For those that don’t, they can just misleading statements in takeovers. This + having 50 shareholders or less; and accept the cash consideration (as most usually regulatory guide is generally considered + the prohibition on proprietary do). The offer of stub equity can help get deals good policy. It has been a key linchpin companies undertaking fundraising across the line, delivering bid premiums to of the regulation of public statements activities. shareholders where some shareholders would during control transactions over the not accept a cash only offer. last two decades. As our markets have The terms of these transactions have become more sophisticated and practices required certain shareholders to direct their Any additional regulation for Australian developed, ASIC signaled it would review scrip consideration be issued to a nominee proprietary companies issuing stub equity and update its policy here. or custodian to be held on the shareholder’s will not mean the death of stub equity offers behalf. The aim is to ensure that HoldCo but instead likely result in bidders using an At this stage, ASIC is continuing work has 50 members or less and can therefore offshore vehicle rather than an Australian on the proposed update. We understand remain a proprietary company and not be proprietary company (as we have already ASIC may be considering taking a hard- subject to the takeovers provisions in the seen in the Brookfield/Aveo transaction). line approach to some matters. In any Corporations Act. This does not seem a good regulatory case, we hope the revised regulatory outcome for Australian shareholders. guide will be released before long and the ASIC considers it important that approach is considered and in line with investors in widely held companies are In any case, we await formal guidance on ASIC’s considered position on the matter. market practice.
41 Criminal prosecutions In 2019, ASIC continued to pursue criminal prosecutions against directors in relation to two separate takeover bids from prior years. In early 2020, it commenced a third criminal prosecution in respect of another company recently taken over. These prosecutions were against:
Clive Palmer and his company Palmer Jennifer Hutson, the former chair of Jan Cameron, a former director of Leisure Coolum Pty Ltd for breaching the the childcare provider G8 Education, in Bellamy’s Australia, for allegedly failing takeovers law in relation to a proposed relation to a takeover bid made in 2015 to disclose a substantial shareholding takeover of the President’s Club Ltd. by G8 Education for Affinity Education interest in Bellamy’s which was ultimately ASIC alleges that Palmer’s company Group. Charges include dishonestly failing taken over by China Mengniu Dairy publicly proposed to make a takeover bid to exercise her powers and discharge her Company last year. The matter relates to of The President’s Club but did not make duties as a director, dishonest use of her a 14.74% shareholding in Bellamy’s held an offer for those securities within two position as a director, 15 counts of giving by her alleged associate, the mysteriously months which was required under section false or misleading information, and two named Black Prince Foundation, 631 of the Corporations Act. counts of attempting to pervert the course incorporated in Curacao. of justice. In 2019, the general counsel of G8 Education pleaded guilty to giving false information to ASIC in connection with the investigation.
THESE CASES SHOW AN INCREASED WILLINGNESS OF ASIC TO PROSECUTE WRONGDOING IN CORPORATE TRANSACTIONS
42 Takeovers Panel Application activity at the Takeovers Panel increased significantly in 2019 with 38 applications being made (up from 27 the previous year). This was the second highest in any year in the Panel’s history. It is interesting that while there has a distinct trend away from takeover bids to schemes of arrangement over the last 20 years as the preferred mode of public company acquisition (see section 3), the Takeovers Panel has been as busy as ever this year. The Panel continues to be the key regulatory body in developing policy in relation to control transactions and disputes. Some landmarks for the Takeovers Panel include, in 2019, the Panel welcoming a new President, Mr Alex Cartel, a very experienced investment banker who prior to that practised as an M&A lawyer. This year the Takeovers Panel will mark its 20th year anniversary in March 2020. By any standard, the Panel has been a tremendous success over this time with its efficient and cost effective decision making. It has also developed policy in a number of areas including frustrating action, 1% break fee, disclosure of derivatives over 5% and enhancing the Truth in Takeovers policy in many respects. These developments have been generally well accepted. Some key Takeovers Panel cases and developments in 2019 included: Backing well-advised target boards in competing bid scenarios Exclusive due diligence Facilitating higher bids GBST Holdings, a case concerning multiple bids for the target Pacific Energy was another Takeover Panel matter involving company. multiple bids. In this matter, the target company was seeking to run an auction This transaction involved a second bidder seeking to upset an amongst potential bidders seeking non-binding indicative offers agreed deal by offering a higher price. To obtain some downside to undertake due diligence and negotiate binding transaction protection, the second bidder required the target to agree to a documentation on an exclusive basis. The potential bidder who break fee before it would make its non-binding indicative offer. In had initially succeeded in being granted exclusivity by offering the essence the break fee would be triggered if the first bidder or any best overall terms was subsequently outbid by another bidder. At other bidder, outbid the second bidder. this point, the target decided to continue on with the bidder it had The first bidder did raise its bid, exercising its matching rights granted exclusivity to even though the subsequent bidder had offered after the second bidder had made its offer and the target a higher price (on a non-binding indicative basis). triggered the matching right process before seeking to change its The subsequent bidder made an application to the Panel criticising recommendation to the second bid. the approach of GBST. The application was generally unsuccessful The first bidder argued that the target had breached its contractual albeit it did succeed in gaining fuller disclosure of the exclusivity commitments to it which resulted in unacceptable circumstances terms which facilitated its ability to make a higher offer which was such that the target should not be required to pay a break fee to the ultimately accepted by the target. second bidder. The Panel disagreed. Leaving to one side the contractual In dismissing the application, the Takeovers Panel noted that the arguments, the Panel was reluctant to find the circumstances process undertaken by the target board achieved a successful outcome unacceptable where the target board had been well advised and their for the shareholders and the Panel would generally be reluctant to approach had resulted in a higher bid for shareholders. second guess target company directors who had been well advised. In both the GBST and Pacific Energy matters, the Takeovers Panel See more on this case on pages 36 to 38. showed a reluctance to second guess the actions of a target board whose conduct had resulted in higher offers for the shareholders.
43 Undisclosed associations ACCC 2019 saw several Takeovers Panel applications alleging Merger action in the Federal Court illegal and undisclosed associations between shareholders In the 2019 edition of this Review we noted that the Pacific holding more than 20% in aggregate in the context of National – Aurizon Holdings merger litigation was the first ACCC voting for the election or removal of directors. These merger action in Court in a number of years. In 2019, the ongoing applications were generally made by the boards of PN–Aurizon litigation (which the ACCC lost at first instance, but companies trying to rebuff unhappy shareholders who is appealing) and the decision by TPG to successfully challenge were seeking to oust the existing directors. the ACCC over its decision to oppose its proposed merger with Vodafone (VHA) in the Federal Court meant that 2019 was the first time ever that two merger cases were being heard by Federal IN ALMOST ALL CASES, THE Court in a single calendar year. The clearance processes in each APPLICANT COMPANY WAS of these cases have now been going for more than 18 months, pointing to the significant uncertainty and delays associated with UNSUCCESSFUL Federal Court action. Each case will of course depend on its owns facts. However, 2019 was also notable because the ACCC’s new merger the Panel has rightly been sceptical of allegations of authorisation process was used and has been identified as an undisclosed associations in cases where shareholders are efficient and cost-effective procedure. AP Eagers sought and ultimately exercising their voting rights in connection with obtained authorisation for its acquisition of Automotive Group corporate governance concerns. Holdings. AP Eagers took advantage of the strict statutory timeframes in this process and obtained conditional clearance Cash settled swaps/derivatives disclosure just 12 weeks after notification. The eBay subsidiary Gumtree has The Takeovers Panel proposed a revised guidance note on also lodged an application in early 2020 seeking authorisation disclosure of equity derivatives, issuing a public consultation for its proposed acquisition of the company which operates the paper on the matter in 2019. The policy is in essence carsguide.com.au and autotrader.com.au platforms. similar to the current position for disclosure of substantial shareholdings above 5%. That is, holdings of physical shares and derivative holdings of more than 5% in aggregate need to be disclosed (as do changes of 1% or more). However, a key change in proposed revisions to the guidance note is to require such disclosure even where there is no control purpose and no control transaction on foot. This would bring the approach in Australia in line with that of many other jurisdictions. The Panel is currently considering submissions received in response to the public consultation paper.
44 TPG–VHA Pacific National–Aurizon The proposed merger between TPG Telecom and Vodafone captured headlines The 2019 edition of this Review throughout 2019. The ACCC commenced its review in September 2018 and highlighted PN’s proposed acquisition of ultimately announced its decision to oppose in May 2019, more than seven intermodal assets from Aurizon Holdings. months later. The ACCC commenced its review of this The ACCC’s decision to oppose the merger came as a surprise to many in the transaction all the way back in October industry; TPG had no substantial position in mobiles, and Vodafone had no material 2017 and opposed it in July 2018, based position in fixed line broadband. TPG and Vodafone argued that the proposed merger on its view that the transaction would was a move to strengthen competition by creating a viable competitor to Telstra lessen competition and enable PN to and Optus. However, the ACCC viewed the proposed merger as being likely to discriminate against competitors. In May substantially lessen competition by precluding TPG from taking its ‘proven track 2019, the Federal Court rejected the record’ of disruption to the mobile sector by independently entering the market, ACCC’s argument. The Court accepted thereby acting as a fourth mobile competitor. that open access undertakings offered by PN on the final day of the hearing would The trial lasted three weeks over September–October 2019, and Justice Middleton prevent it from engaging in the ACCC’s delivered judgment on 13 February 2020, close to 18 months after the ACCC’s hypothesised discriminatory conduct. initial merger commenced. THE ACCC APPEALED THIS RULING The merger was cleared and, although the full reasons remain confidential, Justice AND THE MATTER IS CURRENTLY Middleton made clear in his public comments that he was not swayed by the ACCC’s BEFORE THE FULL COURT OF argument that no merger would result in TPG building a fourth mobile network. THE FEDERAL COURT, WITH THE The ACCC was admonished by Justice Middleton for proposing speculative HEARING COMMENCING IN counterfactuals and attempting to engineer market outcomes. FEBRUARY 2020 – Justice Middleton noted that “it is not for the ACCC or this Court to 29 MONTHS engineer a competitive outcome.” AFTER THE In a media release issued immediately after the decision, the Chair of the ACCC, PROCESS BEGAN Rod Sims, doubled down on the ACCC’s approach to mergers and described the Rod Sims has publicly claimed that decision as the loss of a “once-in-a-generation opportunity for stronger competition competition regulators globally were in and cheaper mobile telecommunications services”. disbelief when they found out a court treated Including the PN–Aurizon case (which is subject to appeal), the ACCC has now lost a behavioural undertaking as a solution to the its past seven contested merger trials in the Federal Court and Tribunal. otherwise real threat to competition.
On a broader perspective, the ACCC’s reaction to its loss in the PN–Aurizon trial foreshadowed the possibility of future law reform. Following that loss, Rod Sims rejected any suggestion that the ACCC’s own litigation strategy was to blame, instead claiming that there were deficiencies with the merger law: There is nothing wrong with our legal strategy. About 85 to 90 per cent of cases we take to court are successful in cartels, competition and consumer law. But on mergers our record is lousy. When you are winning the cases all of the time in all other areas of the law but not in mergers, it is clear there is a problem with the merger regime in Australia. In the immediate aftermath of the ACCC’s loss in TPG–VHA, Rod Sims reiterated that the Commission will “continue to oppose mergers that [they] believe will substantially lessen competition”. The calls for law reform are sure to gain momentum, driven by the will of the ACCC.
45 New merger authorisation process – first two applications The 2017 Harper amendments to the Competition and An important feature of the merger authorisation process is that Consumer Act re-established the ACCC as the first instance there are binding timeframes: the ACCC has 90 days to make decision-maker for merger authorisation; parties had previously a determination, and the Tribunal has up to 120 days more if the been able to apply directly to the Australian Competition parties seek review of an unfavourable ACCC decision. Needless Tribunal following prior changes to the law in 2006. AP Eagers to say, this is much shorter than the processes in the ongoing was the first party to use this new process – in 2019 it sought PN–Aurizon and recently concluded TPG–VHA matters. authorisation for its acquisition of AHG, arguing that the In January 2020, Gumtree became the second party to take acquisition would not lessen competition. AHG and AP Eagers advantage of this new process, arguing that Gumtree’s proposed are the largest and second-largest car dealership groups in acquisition of the owner of two other automotive listing Australia, respectively. AP Eagers proceeded with an off-market platforms would lead to a range of pro-competitive benefits and takeover bid for the ASX-listed AHG, and the takeover was not substantially lessen competition. The ACCC is expected to conditional on ACCC clearance. make a decision on this acquisition in April 2020. The ACCC considered that the proposed acquisition would We very much expect that this authorisation process will substantially lessen competition in Newcastle and the Hunter continue to be considered by parties to merger transactions Valley region. AP Eagers disagreed, however in order to expediate which are likely to come under close scrutiny by the ACCC, the clearance process, it agreed to offer an undertaking to divest due to the defined timeframes, including when the ACCC its assets in the area. On receipt of this undertaking, the ACCC decision is appealed. granted conditional authorisation to AP Eagers.
Merger authorisation process vs merger action in Federal Court KEY 29/04/19 AP Eagers authorisation Application TPG/VHA litigation PN/ Aurizon litigation 24/06/19 Market feedback letter
24/09/18 24/07/19 08/05/19 10/09/19 12/02/20 ACCC Determination ACCC opposes Court hearing Judgement in favour of TPG/VHA commences 24/05/19 01/10/19 Court filing Court hearing ends 15/05/19 Matter Court judgement 17/02/20 27/10/17 19/07/18 11/18 02/19 26/06/19 Full Court ACCC ACCC opposes Court hearing Court hearing Appeal lodged hearing commences and files
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Months
46 2019 PUBLIC M&A TRANSACTIONS
Consideration Transaction Bidder Final Transaction Target Bidder Status Type (Cash / Scrip Type Origin Value A$ /Combination) Healthscope Ltd VIG Bidco Pty Ltd Scheme Successful Canada Cash $4.352 billion Nippon Paint Holdings DuluxGroup Ltd Scheme Successful Japan Cash $3.815 billion Co Ltd Navitas Ltd BGH BidCo A Pty Ltd Scheme Successful Australia Cash $2.086 billion China Mengniu Dairy Bellamy's Australia Ltd Scheme Successful China Cash $1.502 billion Company Ltd Asia Pacific Village Metlifecare Ltd Scheme Current Sweden Cash $1.436 billion Group Ltd Aveo Group Ltd Hydra RL BidCo Pty Ltd Scheme Successful Canada Cash $1.275 billion Automotive Holdings Takeover AP Eagers Ltd Successful Australia Scrip $836 million Group Ltd (off-market) Wesfarmers Lithium Pty Kidman Resources Ltd Scheme Successful Australia Cash $769 million Ltd PSP BidCo and Sooke Webster Ltd Scheme Successful Canada Cash $724 million Investments Inc Shell Energy Australia ERM Power Ltd Scheme Successful Australia Cash $617 million Pty Ltd Project Six Merger Sub, United Credible Labs Inc US Merger Successful Cash $585 million Inc States CHAB Office Pty Ltd Australian Unity Office as trustee for the CHAB Scheme Unsuccessful Australia Cash $495 million Fund Office Trust Ruralco Holdings Ltd Agrium Australia Pty Ltd Scheme Successful Canada Cash $469 million QGIF Swan BidCo Pty Pacific Energy Ltd Scheme Successful Australia Cash $467 million Ltd QMS Media Ltd Shelley Bidco Pty Ltd Scheme Successful Australia Cash $421 million Independence Group Takeover Panoramic Resources Ltd Unsuccessful Australia Scrip $320 million NL (off-market) AVID Property Group Villa World Limited Scheme Successful Australia Cash $294 million Australia Pty Limited GBST Holdings Ltd Kiwi Holdco CayCo Ltd Scheme Successful Australia Cash $268 million Sunshine B Pty Ltd United Gazal Corporation Ltd Scheme Successful Cash $268 million (PVH BidCo) States South Wellcom Group Ltd Innocean Worldwide Inc Scheme Successful Cash $263 million Korea Australia, National Veterinary Care Australian Veterinary Scheme Current NZ and Cash $252 million Ltd Owners League Pty Ltd Singapore
47 Consideration Transaction Bidder Final Transaction Target Bidder Status Type (Cash / Scrip Type Origin Value A$ /Combination) Nine Entertainment Co Takeover Macquarie Media Ltd Successful Australia Cash $250 million Holdings Ltd (off-market) Northern Star Takeover Echo Resources Ltd Successful Australia Cash $228 million Resources Ltd (off-market) Xenith IP Group Ltd IPH Ltd Scheme Successful Australia Cash $192 million MOD Resources Ltd Sandfire Resources NL Scheme Successful Australia Cash $167 million United NetComm Wireless Ltd Casa Systems Inc Scheme Successful Cash $161 million States Japan and Fuji Xerox Asia Pacific CSG Ltd Scheme Successful United Cash $139 million Pte Ltd States Creso Pharma Ltd PharmaCielo Ltd Scheme Withdrawn Canada Scrip $122 million United Pioneer Credit Ltd Robin BidCo Pty Ltd Scheme Current Cash $120 million States Highlands Pacific Ltd Cobalt 27 Capital Corp Scheme Successful Canada Cash $115 million Consolidated Operations CML Group Ltd Scheme Current Australia Scrip $111 million Group Ltd Xuchen International Ltd Nzuri Copper Ltd Scheme Successful China Cash $109 million (Bidco) Grafton Health Holdings Takeover New Orion Health Group Ltd Successful Cash $107 million Ltd (off-market) Zealand Dreamscape Networks United Web.com Group Inc Scheme Successful Cash $105 million Ltd States Kokusai Pulp & Paper Spicers Ltd Scheme Successful Japan Cash $90 million Co Ltd 360 Capital Total URB Investments Ltd Scheme Successful Australia Scrip $86 million Return Fund Legend Corporation Ltd Greenland Bidco Pty Ltd Scheme Successful Australia Cash $79 million Advanced Personnel Konekt Ltd Management Scheme Successful Australia Cash $74 million International Pty Ltd EganStreet Resources Silver Lake Resources Takeover Successful Australia Scrip $65 million Ltd Ltd (off-market) Prime Media Group Ltd Seven West Media Ltd Scheme Unsuccessful Australia Scrip $65 million Qube Logistics (Aust) Takeover Chalmers Ltd Successful Australia Cash $53 million Pty Ltd (off-market)
48 OUR APPROACH
In this Review, we have summarised our key observations of an analysis of the 41 public takeovers and scheme transactions announced during the 2019 calendar year in respect of ASX-listed companies.
We have only analysed transactions which have a market recommended on its announcement. If the target board says value of over $50 million because they are the transactions of “do nothing” while it considers the offer, we have classified the most relevance to our clients and friends in the M&A advisory transaction as “friendly” or “hostile” based on their subsequent community. Also, smaller transactions can involve unusual recommendation to “accept” or “reject”. aspects which can skew the analysis. Where this Review refers to a transaction’s value, the reference We have included all transactions where the parties had entered is to the value of 100% of the target’s equity based on the offer into an agreement or where the bidder had announced an offer or price per share (and where the primary consideration was scrip, an intention to proceed with a firm offer in 2019. We have traced the offer price per share was based on the bidder’s share trading the progress of these transactions until 1 March 2020. price on the date of the announcement of the offer). A full list of transactions analysed is set out on pages 47 to 48. Transactions referred to as providing cash consideration refer to transactions with all-cash consideration or the ability for The primary sources of data used in compiling the Review were shareholders to elect to receive all-cash consideration. bid documents and ASX announcements prepared by the bidder and target and lodged with ASX, which were supplemented by Unless otherwise specified, where this Review refers to the information from websites of regulatory bodies. premium offered in a transaction, it refers to the final premium measured against the closing price of the target shares on the We have classified a scheme as “successful” if it has become day prior to any announcement of the transaction or a potential effective, and a takeover bid as “successful” if it is (or has transaction. become) unconditional and the bidder has substantially increased its shareholding in the target having regard to their Unless otherwise specified, all dollar references in this Review existing shareholding and objectives. are to the Australian dollar. Transactions announced in a foreign currency have been converted to Australian dollars based on We have classified a transaction as “hostile” where a firm the WM/Reuters historical exchange rate data on the day of offer was announced and was not initially recommended by announcement. the target board and as “friendly” where the transaction was
49 ABOUT GILBERT + TOBIN
Gilbert + Tobin is the law firm businesses trust to effect positive outcomes in defining moments. Our people combine exceptional talent and energy across transactions, regulatory issues and disputes. We strive to deliver outstanding results and are proud of the difference we make in our role as a leading employer and corporate citizen.
We provide commercial and innovative We are regularly retained to assist boards legal advice to major corporate and of public and private companies to navigate government clients across Australia and challenging issues that arise in complex and Ranked internationally. We are a trusted legal contested M&A transactions. tier 1 across adviser for many industry leaders who multiple areas of law. We also have a demonstrated track record of value our entrepreneurial culture and assisting listed entities with robust takeover determination to succeed. defence strategies. By providing the best Gilbert + Tobin has a strong emphasis available strategic legal advice, we can on corporate transactional work. assist in ensuring unwelcome approaches Chambers (the most respected of all at inadequate prices do not succeed and, if legal directories) has given us a Band control is to pass, it does so at the best price 1 ranking in each of Corporate/M&A, possible in the circumstances. “Best firm I have ever worked with - practical, Equity Capital Markets, Private Equity, Alternatively, if a friendly and agreed commercial, innovative Competition & Antitrust and Banking deal is sought, we are well placed with our and cost conscious.” & Finance (Acquisition Finance). We knowledge of transaction structures and were named ‘Law Firm of the Year’ for market precedents to ensure a transaction Mergers & Acquisitions in the 2019 can be agreed in a timely and cost efficient edition of Best Lawyers and “Law Firm manner. of the Year” for Corporate Law and for Private Equity Law in the 2020 edition. Gilbert + Tobin’s reputation for expert advice extends beyond our M&A team Our M&A team comprises highly We are one of Australia’s to a broad range of areas including experienced partners and lawyers who leading transactions, regulatory corporate advisory, equity capital markets, and disputes firms, committed achieve commercial results through competition and regulation, banking and to outstanding citizenship. creative solutions and perseverance. infrastructure, technology and digital, We advise on M&A transactions of the energy and resources, disputes and highest commercial significance, but are investigations, real estate and projects and equally able to deliver significant value on employment. smaller deals.
50 RECENT GILBERT + TOBIN TRANSACTIONS
Gilbert + Tobin has advised our clients on the following + Blackstone (as part of a consortium including Canada significant transactions in recent times: Pension Plan Investment Board and GIC) on the acquisition + Adamantem Capital on its $79.1 million acquisition of Legend of a controlling interest in a new entity housing the Financial Corporation by scheme of arrangement and Risk business in joint venture with the previous owner Thomson Reuters, at an overall valuation of US$20 billion + Afterpay founders on a partial sell-down (by way of block trade) of $100 million of shares in Afterpay + Blackstone Group on its acquisition of a stake in PAG, an Asia-focused alternative investment management firm + Anhauser-Busch InBev on the proposed $16 billion sale of Carlton & United Breweries to Asahi Group, the largest + Boardriders, Inc on its $380 million acquisition of Billabong M&A transaction in Australia in 2019 by scheme of arrangement + Anheuser-Busch InBev on the Australian aspects (CUB/ + Canberra Data Centres on its $152 million acquisition of the Fosters) of its US$107 billion takeover of SAB Miller, the Data Centre largest takeover in the world in 2016 + Carlton & United Breweries (ABInBev) on its acquisitions of + Ansell on the US$600 million sale of its Sexual Wellness 4 Pines Brewing Holdings and Pirate Life Brewing business to Humanwell Healthcare and CITIC Capital Chine + Carlyle Private Equity on the $517 million sale of its 50% Partners interest in Coates Hire to its joint venture partner, National + APN Property Group on various successful capital raisings Hire (a subsidiary of Seven Group Holdings) amounting to over $100 million + Citi as lead manager of Appen’s $285 million institutional + APN Funds Management (as responsible entity of placement Generation Healthcare REIT) in respect of the $500 million + Citi as lead manager of NextDC’s $281 million institutional takeover bid for Generation Healthcare REIT by NorthWest placement Australia + Citi as sole underwriter of NAB's dividend reinvestment plan + Ata Resources on its $183 million acquisition of Universal in respect of its May 2019 dividend, underwriting up to a Coal by scheme of arrangement value of $1 billion + Balter Brewing on its acquisition by Carlton & United + Citi as the underwriter of SCA Property Group's $259 Breweries million share placement + BCI Minerals on the $100 million sale process for divestment + Cleanaway Waste Management in relation to the $671 of up to 100% of its iron ore portfolio million acquisition of Tox Free Solutions by scheme of + Beach Energy on all aspects of its successful $1.585 billion arrangement and associated equity capital raising competitive bid to acquire Lattice Energy from Origin + Coca-Cola Amatil on its sale of the SPC fruit and vegetable Energy and related debt and equity capital raisings processing business to Shepparton Partners Collective Pty + BGH Capital led consortium on its $4 billion + takeover Ltd and its group of companies proposal for Healthscope + Coca-Cola Amatil on the joint acquisition by Amatil and its + BGH Capital led consortium (including BGH Capital, major shareholder, US-based The Coca-Cola Company AustralianSuper and Rod Jones) on its $2.1 billion acquisition (TCCC), of a 45% equity stake in Made Group, an of Navitas by scheme of arrangement – the largest take independent Australian beverage manufacturer private led by an Australian PE fund + Convenience Retail REIT in relation to its $237 million IPO and listing on ASX
51 + Cover-More on the $739 million recommended scheme + Goldman Sachs as the sole lead manager and underwriter of proposal from Zurich Insurance Company Orica's $500 million placement to fund the acquisition of + CPE Capital on the acquisition of Marand Precision Exsa, Peru's leading manufacturer and distributor of Engineering industrial explosives + CPE Capital on the $1 billion sale of Accolade Wines to The + Goldman Sachs as sale agent for the share sale facility Carlyle Group established in connection with the $16 billion demerger of Coles Group from Wesfarmers + Credit Suisse (Australia) as the underwriter of AUB Group’s $116.3 million accelerated non-renounceable rights + Goldman Sachs as underwriter of Bank of Queensland's entitlement offer $250 million placement + Credit Suisse and UBS as the underwriters of Netwealth + Goldman Sachs, UBS and Macquarie Capital as joint lead Group’s $264 million IPO and listing on ASX managers of Latitude Financial Services Group’s proposed IPO and listing on ASX + Credit Suisse, Goldman Sachs and J.P. Morgan as joint lead managers of Home Consortium’s $325 million IPO and + Goldman Sachs, UBS, Credit Suisse and Bell Potter as joint listing on ASX lead managers of Coronado Global Resources Inc.'s $774 million IPO and listing on ASX + Credit Suisse, Jarden and Deutsche Bank Craigs as joint lead managers and underwriters of Kathmandu’s NZ$145 million + GrainCorp on its defence of the $3.3 billion takeover bid by accelerated renounceable entitlement offer to part fund its Long-Term Asset Partners A$350 million acquisition of Rip Curl Group + GrainCorp on the sale of its Australian Bulk Liquid Terminals + Crescent Capital Partners on its $153.5 million acquisition of business to ANZ Terminals for an enterprise value of the Viridian Glass group from CSR approximately $350 million + Crescent Capital Partners on its $195 million acquisition of + Great Panther Silver on its $144 million acquisition of Healthcare Australia Beadell Resources by scheme of arrangement + Crescent Capital Partners on its acquisition of Nucleus Network, + Harbour Energy/EIG Partners consortium on its proposed a clinical research subsidiary of Baker Heart and Diabetes $14.4 billion bid for Santos + Crescent Capital Partners on the $205 million sale of its + Infratil on the sale of Perth Energy Holdings to AGL Energy GroundProbe business to Orica + Investa Commercial Property Fund on the sale of a 50% + Crescent Capital Partners on the sale of its Steel-Line interest in the Investa Office Management platform to business to Japanese company Bunka Shutter Macquarie Capital + Crescent Capital Partners on the successful fund raise of its + Investa Property Group on its $276 million acquisition of a sixth fund, securing a firm record $800 million from its investors strategic stake in Investa Office Fund and on the $3.4 billion contested acquisition (by trust scheme) of Investa Office Fund + Damstra Holdings on its IPO and listing on ASX + IOOF on its $539 million placement and share purchase + Destinations of the World on its US$173 million sale to plan to fund the acquisition of ANZ’s One Path Pensions and Webjet and associated capital raising investments business + DuluxGroup on its successful $3.8 billion acquisition by + IOOF on its $975 million acquisition of Australia and New Nippon Paint by scheme of arrangement, the largest trade/ Zealand Banking Group’s (ANZ) OnePath Pensions and strategic takeover in Australia in 2019 Investments and aligned dealer groups businesses + Emeco on its $686 million three-way merger with + Jacobs Engineering on the successful $4.6 billion sale of its Orionstone and Andy's Earthmovers energy, chemicals and resources group to WorleyParsons + Exablaze on its acquisition by Cisco Systems + J.P. Morgan and Macquarie as joint lead managers of + Five V Capital’s portfolio company, The Probe Group, on its Reliance Worldwide Corporation's $1.1 billion accelerated joint acquisition with Quadrant Private Equity of non-renounceable entitlement offer for the MicroSourcing International from Salmat for an enterprise transformational acquisition of John Guest Holdings value of $300 million + FMR, Bremerton & Bartlett on the $271 million sale of their 30% stake in Barminco to Ausdrill 52 + J.P. Morgan and Macquarie Capital, the joint lead managers + Majority shareholders of Bras N Things on the $500 million and bookrunners of Investec Australia Property Fund’s dual sale to Hanes Brands listing on ASX and IPO, which also featured a block trade sale + Mineral Resources in relation its proposed $523 million by the fund’s major securityholder, Investec Property Fund of acquisition of AWE by scheme of arrangement approximately $65 million worth of securities + Mineral Resources on the US$820 million sale of 60% of + J.P. Morgan and Morgan Stanley as joint lead managers of the Wodgina Lithium Project to Albemarle Corporation Tyro Payments’ $287 million IPO and listing on ASX + Mineral Resources on the US$480 million acquisition of + J.P. Morgan as lead manager in relation to Growthpoint's 40% (in two modules) of Albemarle's Kemerton hydroxide $150 million share placement facility + J.P. Morgan as underwriter of Charter Hall Education Trust’s + Mineral Resources on its proposed $280 million acquisition $120 million institutional placement of fully paid units of Atlas Iron + J.P. Morgan, Morgan Stanley and China International Capital + Mineral Resources on the sale process for the $2 billion Corporation Hong Kong Securities as joint lead managers in divestment of up to a 49% interest in its Wodgina lithium relation to the US$2.5 billion entitlement offer and mine assets placement by Yancoal Australia, to partly fund its acquisition + MoneyMe Limited on its IPO and listing on ASX of Coal & Allied from Rio Tinto + Morgan Stanley and Goldman Sachs as joint lead managers of Elmo + Jacobs Engineering Group Inc. on Australian legal aspects of Software's institutional placement and secondary sell down its $4.6 billion sale of its energy, chemicals and resources division to WorleyParsons + Morgan Stanley and UBS as joint lead managers of Primary Health Care's $250 million accelerated non-renounceable + Jadestone Energy on its acquisition of the Montara Oil Field from entitlement offer PTTEP including senior debt facility and equity capital raising + Morgan Stanley and UBS as joint lead managers of Atlas + JP Morgan and Macquarie Capital as the joint lead managers on Arteria’s $1.35 billion entitlement offer and placement Investec Australia Property Fund’s placement and capital raising + Morgan Stanley as lead manager and sole bookrunner of + Kin Group on its unsolicited on-market takeover of The New Energy Solar’s $205 million IPO and listing on ASX Reject Shop + MYOB on the sale of its majority interest in Kounta to + KKR on its acquisition of Laser Clinics Australia Lightspeed + KKR on its $2 billion acquisition of MYOB Group by scheme + Neptune Energy Group (which is backed by funds advised by of arrangement Carlyle, CVC and a group of co-investors) on the Australian + Konekt on its sale to Advanced Personnel Management by aspects of its €4.7 billion acquisition of a 70% shareholding in scheme of arrangement ENGIE E&P International S.A. from France's ENGIE Group + KordaMentha (as administrators of Arrium) on the dual-track + Nitro Software on its $110 million IPO and listing on ASX IPO and trade sale process of Moly-Cop which resulted in + Northern Star Resources on its $193 million acquisition of the sale of Moly-Cop to American Industrial Partners for an the remaining shares in Echo Resources that it did not enterprise value of US$1.23 billion already own + Lifehealthcare on its $211 million sale to Pacific Equity + NSW Government in relation to the $2.6 billion concession Partners by scheme of arrangement of Land and Property Information NSW + Liverpool Partners (together with Adamantem Capital) on its + Opthea on its share placement $108 million acquisition of Zenitas Healthcare + Pacific Equity Partners and management shareholders on the + Macquarie Capital and Shaw and Partners as joint lead $950 million sale of Allied Pinnacle to Nisshin Seifun Group managers and underwriters of Abacus' $250 million placement and SPP + Pacific Equity Partners and The Carlyle Group on their $1.23 billion acquisition of iNova Pharmaceuticals from the Valeant + Macquarie Capital as sole lead manager of Magellan Financial Group Group's $275 million placement + Pacific Equity Partners on its $455 million acquisition of Allied Mills Pty Ltd from its joint shareholders, GrainCorp and Cargill Australia 53 + Palisade Investment Partners on its $605 million acquisition of a + Qube on its $800 million equity capital raising to fund its stake in Sunshine Coast Airport from Sunshine Coast Council acquisition of the Patricks Container Terminal business + Panoramic Resources on its successful defence of the + Reliance Rail on its $2 billion refinancing including an injection $312 million hostile takeover bid by Independence Group NL of additional equity from 2 of its 3 existing shareholders + PayPal on its US$400 million acquisition of HyperWallet Inc., + Resource Capital Fund VII L.P. on its investment in Cuprous and the integration of the Australian Hyperwallet business Capital + Pemba Capital Partners (and other shareholders) on the + Risk Capital Advisors on its sale to Willis Towers Watson $701 million sale of Device Technology Australia (an + RBC Capital Markets and Euroz Securities as joint lead Australian medical device manufacturer and distributor) to managers of Carnarvon Petroleum's share placement Navis Capital + Ruralco Holdings on its $469 million acquisition by Nutrien + Pemba Capital Partners on the $170 million acquisition of a by scheme of arrangement majority stake in ONCALL Group Australia + SAI Global on its $1.24 billion acquisition by Casmar + Pemba VCLP (a newly established PE fund) on its $650 (Australia) Pty Ltd (a wholly owned subsidiary of the Baring million acquisition of the assets of RMB Australia Private Equity Asia Fund IV) by scheme of arrangement + Platinum Equity LLC on the Australian law aspects of its + Sandfire Resources on its $167 million acquisition of MOD US$2.5 billion acquisition of Multi-Color Corporation (a Resources by scheme of arrangement leader in global label solutions) + SG Fleet on its $800 million proposal to acquire Eclipx + Presence of IT on its sale to Deloitte to create the largest Group by scheme of arrangement human capital consultancy in APAC + Shaw and Partners on the sale of 51% of its shares to SIX + Property Guru on its proposed IPO and listing on ASX Swiss Exchange-listed EFG International and associated + Quadrant Private Equity and the minority owners of the Real Pet shareholder arrangements Food Co on the $1 billion sale of the Real Pet Food Co to a + Sime Darby Berhad on its $US136 million acquisition of the consortium of investors including New Hope, Hosen and Temasek Gough Group + Quadrant Private Equity in relation to its $540 million sale of + SiteMinder on its $130 million acquisition by BlackRock, Pendal, Zip Industries to Culligan, a US portfolio company of Advent AustralianSuper, Goldman Sachs and Ellerston Capital International Global Private Equity + Sonic Healthcare on its $750 million acquisition of Aurora + Quadrant Private Equity on its $150 million sale of CQMS Diagnostics and its $600 million placement and related Razer to American Industrial Partners share purchase plan to part fund that acquisition + Quadrant Private Equity on its $200 million acquisition of + Spotless on the defence of the unsolicited $1.3 billion iconic confectionery manufacturer Darrell Lea takeover bid by Downer EDI + Quadrant Private Equity on its $421 million acquisition of + SS&C Technologies on its $244 million proposal to acquire QMS Media by scheme of arrangement GBST Holdings by scheme of arrangement + Quadrant Private Equity on its acquisition of GraysOnline + Stantec on its acquisition of Wood & Grieve Engineers + Quadrant Private Equity on its acquisition of a majority stake + State of NSW as a seller in the $1.6 billion sale of Property in Adore Beauty Exchange Australia to a consortium comprised of Link, CBA + Quadrant Private Equity on the acquisition of a majority stake and Morgan Stanley in Modibodi + Sun Capital in relation to Australian law aspects of its acquisition of + Quadrant Private Equity on the acquisition of a majority stake Regal Drives Technologies from Regal Beloit Corporation in Love to Dream + Superloop on its proposed $494 million acquisition by QIC + Quadrant Private Equity’s portfolio company, Fitness and by scheme of arrangement Lifestyle Group, on the $200 million acquisition of CMG Asia + Syrah Resources on its $112 million convertible note issue to + Quadrant Private Equity on the acquisition of Total Tools AustralianSuper and non-renounceable entitlement offer + Qube led consortium on the $9 billion acquisition of Asciano (the largest public M&A deal in Australia in 2016)
54 + TDM Growth Partners on its investment in the ROKT software + UBS and Goldman Sachs (as joint lead managers) on Bingo business, a leading e-commerce marketing tech company Industries' $425 million accelerated non-renounceable + Telstra in relation to the merger of Fox Sports Australia entitlement offer, to fund its acquisition of Dial A Dump Industries (owned by News Limited) and Foxtel (owned 50/50 by News + UBS as lead manager of Costa Group's $176 million capital Limited and Telstra) raising (PAITREO) + Telstra in connection with a new US$500 million venture + UBS as underwriter of EML Payments’ $120 million placement capital fund launched by Telstra Ventures, the venture + Velocity Frequent Flyer on its proposed IPO and listing on ASX capital arm of Telstra + Viva Energy Australia on its $2.65 billion IPO and listing on + Telstra on its $1.25 billion off-market share buy-back (2016) ASX, the largest ever non-government IPO in Australian + Terex Corporation (NYSE: TEX) on the sale of Demag corporate history Mobile Cranes business to Tadano for an enterprise value of + Viva Energy on the $734.3 million sale of its 35% stake in approximately $215 million Viva Energy REIT to Charter Hall Group and the Charter + The Carlyle Group (through its Carlyle International Energy Hall Long WALE REIT by way of block trade Partners platform) on the Australian aspects of its acquisition + Viva Energy REIT on its $1.5 billion IPO and listing on ASX of EnerMech Group from Lime Rock Partners + Web.com and Siris Capital on their $105.2 million acquisition + The owners of Alpenglow Australia on the sale of its radiology of Dreamscape Networks by scheme of arrangement and medical imaging business to the Qscan Group + Wesfarmers on the sale of its 13.23% stake in Quadrant + The shareholders of Outback Spirit Tours on its sale to Energy alongside co-sellers Brookfield, Macquarie and Experience Australia Group AMB Holdings, valued at US$2.15 billion cash plus + The Stars Group on its acquisition of 80% of CrownBet, and contingent payments related to the Bedout Basin then CrownBet on its acquisition of William Hill (aggregate + Whitehaven Coal on its US$200 million acquisition of deal value of $650 million) Winchester South from Rio Tinto + The Stars Group on its $151 million acquisition of the + Wilsons Corporate Finance and Ord Minnett as joint lead remaining 20% stake in BetEasy managers in relation to Whispir’s IPO and listing on ASX + Tilt Renewables on the $1.07 billion sale of the 270MW + Xero in respect of its US$300 million convertible note Snowtown 2 wind farm to Palisade Investment Partners and offering and associated call option transactions First State Super + Xuchen International, a subsidiary of Chengtun Mining + TPG Capital on its $1 billion (enterprise value) acquisition of Group Co, in relation to the $109 million acquisition of Nzuri Greencross Copper by scheme of arrangement + TPG Capital on the acquisition of Novotech Holdings Pty Ltd + Yancoal Australia on the US$230 million acquisition of Mitsubishi + TPG Capital’s portfolio company, Greencross, on its Development’s 28.9% interest in the Warkworth joint venture acquisition of Animal Referral Hospital + Yancoal Australia’s Independent Board Committee on the + TPG consortium (comprising TPG Capital and the Ontario US$3.4 billion acquisition of Coal & Allied Industries from Teachers’ Pension Plan) on the proposed $2.76 billion Rio Tinto and the associated US$2.5 billion entitlement offer acquisition of Fairfax and placement to fund that acquisition + Tyson Foods, Inc. on the Australian aspects of its US$2.16 + Yancoal on the Australian legal aspects of its dual primary billion acquisition of the Keystone Foods business from listing on the Hong Kong Stock Exchange and the associated Marfrig Global Foods HK$1.61 billion IPO. The transaction included a pro-rata + UBS AG and RBC Capital Markets as joint lead managers accelerated renounceable entitlement offer in Australia to and underwriters of EML Payments' $250 million existing Yancoal shareholders accelerated non-renounceable entitlement offer and + Zomojo on its acquisition by Cisco Systems Inc institutional placement to partially fund the $423 million acquisition of Prepaid Financial Services
55 ABOUT THE AUTHORS
NEIL PATHAK Partner T + 61 3 8656 3344 M + 61 410 452 466 E [email protected] Neil is co-head of the Corporate/M&A group and is also a In 2019, Neil advised on the following significant transactions member of G+T’s board of partners. Neil’s practice centres on (among other matters): M&A (with particular expertise in listed company takeovers + Anheuser-Busch InBev on the proposed $16 billion sale of and cross-border acquisitions), Takeovers Panel matters, Carlton & United Breweries to Asahi Group, the largest M&A private sales and disposals, private equity transactions, equity transaction in Australia in 2019; capital raisings and other capital management transactions and corporate governance matters. + DuluxGroup on its successful $3.8 billion acquisition by Nippon Paint by scheme of arrangement, the largest trade/ Neil is a member of the Australian Government's Takeovers strategic takeover in Australia in 2019; Panel (the Panel is a peer review body that regulates public M&A and is the primary forum for resolving takeover disputes). + BGH consortium (including BGH Capital, AustralianSuper He is also a Senior Fellow of the University of Melbourne Law and Rod Jones) on its successful $2.1 billion acquisition of School. Navitas by scheme of arrangement – the largest take private by an Australian PE fund; Neil is recognised as a leading Australian Corporate and M&A + lawyer by leading directories including Best Lawyers, Chambers Tilt Renewables on its successful $1.07 billion sale of Global, Chambers Asia-Pacific, The Legal 500, Doyles and Snowtown 2 wind farm (Australia’s 2nd largest windfarm) to International Who’s Who of M&A Lawyers. Best Lawyers named Palisade Investment Partners and First State Super; him Melbourne’s M&A, Corporate or Private Equity Lawyer of + Jacobs Engineering on the successful $4.6 billion sale of its the Year in six of the last eight years. energy, chemicals and resources group to WorleyParsons; + TPG Capital’s successful $910 million acquisition of "HE WOULD ALMOST WITHOUT HESITATION BE Greencross; OUR FIRST CALLOUT OF MELBOURNE.” + Balter Brewing on its successful acquisition by Carlton & Chambers Asia-Pacific 2020 United Breweries; + Syrah Resources on its innovative $112 million capital raising involving a convertible note issue to AustralianSuper; NEIL IS “A VERY SEASONED CAMPAIGNER AND + Damstra Technology on its successful initial public offering ONE OF THE BEST M&A LAWYERS IN MELBOURNE” and listing on ASX; and AND “A FANTASTIC PERSON TO WORK WITH ON A + APN Property Group on various successful capital raisings LARGE PUBLIC M&A TRANSACTION.” amounting to over $100 million. Chambers Asia-Pacific 2019
56 COSTAS CONDOLEON Partner T + 61 2 9263 4821 M +61 413 610 969 E [email protected] Costas is co-head of the Corporate/M&A group and is also a In 2019, Costas advised on the following significant transactions: member of G+T’s board of partners. Costas specialises in mergers + GrainCorp on its $3.3 billion approach from Long-Term Asset and acquisitions, takeovers, corporate and securities law, capital Partners; markets and corporate governance matters. + Ruralco on the $1.1 billion (enterprise value) take private by Costas is widely recognised as one of Australia’s leading strategic Nutrien; M&A and securities lawyers. He is consistently recognised by leading directories for his expertise, including being listed in + The Stars Group on its $6 billion merger with Flutter Chambers Global, Chambers Asia Pacific, Best Lawyers and The Entertainment, to create the world’s biggest online gaming Legal 500 in a variety of practice areas including Corporate and group; Mergers & Acquisitions. He was also named by Best Lawyers as + Adamantem Capital on its take private of ASX-listed Legend Lawyer of the Year in various corporate law categories in 5 of the Corporation; last 7 years. + Shaw and Partners on the sale of 51% of the company to SIX Swiss Exchange-listed EFG International; COSTAS IS HIGHLY REGARDED IN THE MARKET FOR COMPLEX CORPORATE MATTERS INCLUDING + Superloop on its proposed $494 million acquisition by QIC by TAKEOVERS, SECURITIES LAW AND CORPORATE way of scheme of arrangement; and GOVERNANCE. + MoneyMe on its IPO and listing on ASX.
A CLIENT OBSERVES: "HE'S NO-NONSENSE AND KNOWS HIS STUFF, AND HE'S VERY EFFICIENT AND GIVES GOOD, SENSIBLE ADVICE; HE WON'T JUST SAY WHAT YOU CAN'T DO. I HAVE ALWAYS FOUND HIM TO BE ROUNDED AND COMMERCIAL IN THE ADVICE HE GIVES." Chambers Asia-Pacific 2020
57 CRAIG SEMPLE ALEX KAUYE Partner Partner T + 61 3 8656 3349 T + 61 3 8656 3386 M +61 400 446 028 M +61 431 027 729 E [email protected] E [email protected] Craig specialises in general corporate law with an emphasis on Alex specialises in mergers & acquisitions, equity capital markets mergers and acquisitions, takeovers and schemes of arrangements transactions and private equity, as well as general corporate and and equity capital market transactions. securities transactions. Craig is regarded as one of Australia’s leading M&A lawyers (most In 2019, Alex advised on the following significant transactions: recently acknowledged by Chambers Asia Pacific 2020). Best Lawyers + DuluxGroup on its successful $3.8 billion acquisition by has recognised Craig since 2010 in the 7 practice areas, including Nippon Paint by scheme of arrangement, the largest trade/ Mergers & Acquisitions, Equity Capital Markets, Corporate Law, strategic takeover in Australia in 2019; Corporate Governance and Practice and Private Equity. Craig has also been named as a Melbourne Lawyer of the Year in either Corporate + KKR on corporate aspects of its $3.2 billion acquisition of Law, Private Equity or Corporate Governance over the last 7 years, most Arnott’s Biscuits and certain international operations of recently in 2020 for Corporate and Governance law. Campbell Soup; In 2019, Craig advised on the following significant transactions: + KKR on its $2 billion acquisition of MYOB by scheme of arrangement; + IOOF on its $975 million acquisition of ANZ’s One Path Pensions + and Investments and aligned dealer groups businesses; The Tang family office on their substantial holding in Cromwell Property Group (including the related Takeovers + BGH consortium (including BGH Capital, AustralianSuper Panel proceedings); and Rod Jones) on its successful $2.1 billion acquisition of Navitas by scheme of arrangement – the largest take private by + MYOB on the sale of Kounta to Lightspeed; an Australian PE fund; + MYOB on the sale of Acumatica to EQT; + IFM in respect of its acquisition of My Plan Manager; + Damstra on its successful initial public offering and listing on + Arq Group Limited in relation to its sale of its TPP Wholesale ASX; and reseller business to CentralNic Group; + Citi on its $2 billion underwrite of NAB’s dividend + SS&C Technologies on its $244 million proposal to acquire GBST reinvestment plan. Holdings by scheme of arrangement; ALEX WON THE ‘NEW PARTNER OF THE YEAR - 3 + the sale of Zomojo and Exablaze to Cisco Systems Inc; YEARS OR LESS’ CATEGORY AT THE 2019 PARTNER + Syrah Resources on its underwritten accelerated entitlement OF THE YEAR AWARDS AND WAS A FINALIST IN offer and its associated issue of a convertible note to THE ‘DEALMAKER OF THE YEAR’ CATEGORY AT AustralianSuper, of a combined value of $112 million; THE 2019 AUSTRALIAN LAW AWARDS. + Opthea, APN Convenience Retail REIT and APN Industria REIT on their capital raisings; and + Goldman Sachs as underwriter of Bank of Queensland's $250 million placement.
CRAIG IS AN "INCREDIBLY COMMERCIAL, INCREDIBLY DILIGENT" PRACTITIONER WITH AN IMPRESSIVELY BROAD REMIT, EMBRACING M&A, EQUITY CAPITAL MARKETS AND PRIVATE EQUITY TRANSACTIONS, PLUS CORPORATE GOVERNANCE MANDATES. Chambers Asia-Pacific 2019 58 DAVID CLEE SARAH TURNER Partner Partner T + 61 2 9263 4368 T +61 8 9413 8433 M +61 424 181 692 M +61 400 011 978 E [email protected] E [email protected] David is a corporate lawyer with considerable experience in Sarah specialises in mergers and acquisitions (particularly large-scale public and private mergers and acquisitions, equity takeovers and schemes of arrangement), capital raisings, capital markets and corporate restructuring transactions. advising on securities law and Listing Rule matters and corporate David’s transactional experience spans a broad range of key advisory and governance work. industry sectors, including media, banking and financial services, Sarah was listed as a Best Lawyer for Mergers and Acquisitions energy, mining, retail and general industrial. He also regularly Law, Equity Capital Markets Law, Corporate Governance assists financial advisory firms and offshore investment funds to Practice and Corporate Law by Best Lawyers 2020. structure their most complex corporate transactions. In 2019, Sarah advised on the following significant transactions: David has acted on some of Australia’s largest and most complex corporate transactions, including advising: + Panoramic Resources, Euroz, Australis Oil & Gas, Sipa Resources, Alta Zinc, Venus Metals, Botanix and others on + Boardriders, Inc. on its $380 million acquisition of ASX-listed capital raisings; Billabong International by scheme of arrangement; + Sandfire Resources on stakes in several public companies; + GrainCorp in relation to a takeover offer from Archer Daniels Midland Company, which valued GrainCorp at $3.4 billion; + Triton Minerals on its change of control transaction; and + Pacific Equity Partners on its $1.1 billion acquisition of Spotless + Panoramic on the successful defence of the hostile takeover Group by scheme of arrangement; bid by Independence Group. + Coal & Allied in relation to a scheme of arrangement under which Coal & Allied was privatised by Rio Tinto and Mitsubishi Development (the transaction valued Coal & Allied at $10.8 GILBERT + TOBIN’S M&A GROUP IS PRAISED billion); FOR "EXCELLENT PROJECT MANAGEMENT + Telstra Corporation, in its capacity as a partner in the FOXTEL SKILLS WITH A HIGH DEGREE OF TECHNICAL partnership, in relation to FOXTEL’s $2 billion acquisition of AUSTAR; EXCELLENCE ACROSS ALL COMPLEX ISSUES." + Vitol on its $2.9 billion acquisition of Shell’s Australian THE TEAM HAS A "BROAD SPREAD OF SUBJECT downstream assets, including the Geelong Refinery and 870 MATTER EXPERTS, WITH ALL ADVICE WELL retail sites across the country; and PACKAGED AND COMMUNICATED THROUGH A + The establishment and IPO of Viva Energy REIT, a multi- CENTRAL CONDUIT." billion-dollar ASX-listed stapled entity with a portfolio of IFLR1000 2020 – M&A service station sites.
"HE'S EXTREMELY DETAILED, COMMERCIAL, TRUSTWORTHY, TAKES RESPONSIBILITY FOR THE FIRM'S WORK PRODUCT AND ITS DELIVERY." IFLR1000 2019
59 KEVIN KO EBONY KEENAN-DUNN Partner Special Counsel T +61 2 9263 4040 T +61 3 8656 3305 M +61 422 448 138 M +61 499 700 495 E [email protected] E [email protected] Kevin is a partner in Gilbert + Tobin’s Corporate Advisory group. Ebony has experience in advising both public and private He advises on strategic mergers and acquisitions and corporate company clients in relation to mergers and acquisitions, transactions, specialising in private M&A deals, public takeovers corporate fundraising, private equity transactions and general (friendly and hostile), schemes of arrangement, equity capital corporate and commercial issues. She has particularly strong markets transactions and general corporate and securities law experience in listed company takeovers and schemes of matters. arrangement, and has acted on more than twenty-five control transactions and a significant number of primary and secondary In 2019, Kevin advised on the following significant transactions: capital raisings for her clients. + Ruralco Holdings Ltd on its $469 million acquisition by Prior to joining Gilbert + Tobin, Ebony was special counsel with Agrium Australia, a subsidiary of Nutrien, by way of scheme a large global firm where she gained experience in Australia, of arrangement; London and Dubai. + Web.com on its $105 million acquisition of Dreamscape Networks by way of scheme of arrangement; In 2019, Ebony advised on a number of significant transactions including: + Xuchen International, a subsidiary of Chengtun Mining Group Co, on its $109 million acquisition of Nzuri Copper + KKR on corporate aspects of its $3.2 billion acquisition of Limited by way of scheme of arrangement; Arnott’s Biscuits and certain international operations of Campbell Soup; + SiteMinder on its $130 million capital raising from multiple international and Australian investors; + BGH consortium (including BGH Capital, AustralianSuper and Rod Jones) on its successful $2.1 billion acquisition of + The Stars Group on its $151 million acquisition of the Navitas by scheme of arrangement; remaining 20% stake in BetEasy; and + KKR on its $2 billion acquisition of MYOB Group by scheme + Shaw and Partners on the sale of 51% of its shares to SIX of arrangement; and Swiss Exchange-listed EFG International, and associated shareholder arrangements. + MYOB on the sale of its interest in Acumatica and rollover into the acquiring entity.
GILBERT + TOBIN’S M&A GROUP IS "HIGHLY RATED, COMMERCIALLY FOCUSED WITH EXCELLENT LEGAL SKILLS." IFLR1000 2020
60 LISA d’OLIVEYRA SIMON MUYS Executive Counsel Partner T +61 3 8656 3409 T +61 3 8656 3312 M +61 407 330 072 M +61 459 100 211 E [email protected] E [email protected] Lisa is a senior lawyer with significant experience in mergers and Simon leads Gilbert + Tobin’s Melbourne Competition and acquisitions, equity capital markets transactions, company law Regulation practice. He specialises in competition law and and corporate governance. regulated industries, with particular expertise across the energy, Lisa is responsible for a range of strategic initiatives designed to telecommunications, resources and transport sectors. foster key client relationships and originate new business. She He has extensive experience advising clients on merger clearances, spearheads a number of programs designed to add value to a ACCC investigations and enforcement matters. He also range of current and prospective clients, including board room specialises in the design and, where necessary, authorisation of a events, thought leadership (including publications on range of collaborative arrangements as well as engagement with developments in M&A and corporate governance) and sectoral regulators. continuing professional development for in-house counsel Simon also advises extensively on infrastructure and access issues, clients. Lisa also manages the firm’s relationship with key industry including on access issues and disputes, pricing design, technical organisations including ACC Australia. and economic regulation. Prior to joining Gilbert + Tobin, Lisa was a senior lawyer at a top Simon’s leading practice is recognised by the major legal tier global law firm. Lisa has also worked at Davis Polk & Wardwell directories. He has been listed for a number of years in Best in New York. Lawyers for his work across Competition Law, Regulatory Practice and Telecommunications. Who’s Who Legal: Competition Future Leaders 2019 recognised Simon as “excellent” and “a very intelligent, creative thinker” who “quickly understands clients’ risk appetite and targets advice at the right level.” Chambers Asia-Pacific 2020 refers to clients singling him out as an “exceptionally bright guy” in this space who is “extremely proficient in this area and I would happily use him in the future.” Who’s Who Legal (2018) described Simon as "an excellent competition lawyer" who boasts "unparalleled experience in matters involving access to essential pieces of infrastructure".
GILBERT + TOBIN’S M&A GROUP IS COMMENDED FOR ITS "HIGH QUALITY ADVICE, WITH COMMERCIAL ACUMEN PROVIDED BY A HIGHLY ENGAGED AND RESPONSIVE TEAM." IFLR1000 2020 – M&A
61 AWARDS + RECOGNITION
2020 BEST LAWYERS 2020 CHAMBERS ASIA 2019 MERGERMARKET 2019 LAWYERS WEEKLY AUSTRALIA PACIFIC AWARDS AUSTRALIA M&A PARTNER OF THE YEAR AWARDS AWARDS Gilbert + Tobin was named 38 Gilbert + Tobin partners Law Firm of the Year for are recognised in 21 areas of Gilbert + Tobin won: Corporate Advisory partners, Corporate Law and for law. We are one of only two + Private Equity Legal Rachael Bassil and Alex Private Equity Law in the Australian law firms to be Adviser of the Year Kauye were recognised 2020 edition of Best ranked Band 1 in Corporate/ among Australia’s top legal Lawyers. This follows on M&A, Equity Capital + M&A Legal Adviser of the professionals. from G+T being named Law Markets, Private Equity and Year (Business Services) Firm of the Year for Mergers Competition & Antitrust. + M&A Legal Adviser of the & Acquisitions in the 2019 We are also ranked Band 1 in Year (Consumer) 2019 FINANCIAL edition of Best Lawyers. Acquisition Finance, TMT, TIMES ASIA-PACIFIC Fintech and Charities. INNOVATIVE LAWYER 72 Gilbert + Tobin partners AWARDS are recognised by Best 2019 AUSTRALASIAN LAW AWARDS Lawyers, representing over 2020 LEGAL 500 Gilbert + Tobin won: 85% of the partnership Gilbert + Tobin was named + Most Innovative Law Firm Gilbert + Tobin has been acknowledged as leading in Law Firm of the Year (101- in Asia-Pacific ranked Tier 1 across eight their areas of expertise. 500 lawyers). different practice areas: + Legal Innovator of the Year Among these, 10 partners are Corporate and M&A; + Innovation in the Business named as Best Lawyers 2020 Competition and Trade; 2019 AFR CLIENT CHOICE of Law: Technology Lawyer of the Year, including Dispute Resolution; AWARDS six Corporate Advisory Intellectual Property; partners (Rachael Bassil, Capital Markets (Equity); Gilbert + Tobin was named 2019 ASIALAW PROFILES Costas Condoleon, Peter Restructuring and Insolvency; Most Innovative Firm for the Cook, Justin Mannolini, Neil Banking and Finance; & IT second consecutive year. Gilbert + Tobin was ranked Pathak and Craig Semple). and Telecommunications. 'Outstanding' in M&A, private equity, capital markets.
62 GILBERT + TOBIN M&A PARTNERS
Julie Athanasoff Rachael Bassil Sophie Chen David Clee Costas Condoleon Partner Partner Partner Partner Partner +61 8 9413 8406 +61 2 9263 4733 +61 2 9263 4623 +61 2 9263 4368 +61 2 9263 4821 [email protected] [email protected] [email protected] [email protected] [email protected]
Peter Cook Alastair Corrigall Adam D’Andreti Chris Flynn Elizabeth Hill Partner Partner Partner Partner Partner +61 2 9263 4774 +61 2 9263 4170 +61 2 9263 4375 +61 2 9263 4321 +61 2 9263 4470 [email protected] [email protected] [email protected] [email protected] [email protected]
Alex Kauye Kevin Ko Tim Gordon Deborah Johns David Josselsohn Partner Partner Partner Partner Partner +61 3 8656 3386 +61 2 9263 4040 +61 2 9263 4251 +61 2 9263 4120 +61 2 9263 4127 [email protected] [email protected] [email protected] [email protected] [email protected]
Tim Kennedy Adam Laura Justin Little Ben Macdonald Justin Mannolini Partner Partner Partner Partner Partner +61 2 9263 4652 +61 2 9263 4144 +61 8 9413 8464 +61 3 8656 3351 +61 8 9413 8491 [email protected] [email protected] [email protected] [email protected] [email protected]
Hiroshi Narushima Neil Pathak Peter Reeves Craig Semple Bill Spain Partner Partner Partner Partner Partner +61 2 9263 4188 +61 3 8656 3344 +61 2 9263 4290 +61 3 8656 3349 +61 2 9263 4009 [email protected] [email protected] [email protected] [email protected] [email protected]
Sarah Turner John Williamson-Noble Ebony Keenan-Dunn Lloyd Chater Partner Partner Special Counsel Special Counsel +61 8 9413 8433 +61 2 9263 4030 +61 3 8656 3305 +61 2 9263 4284 [email protected] [email protected] [email protected] [email protected]
63 GTLAW.COM.AU
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