A carbon tax will not have a noticeable impact on M&A, lawyers interviewed by ALB have predicted. “We have not seen a marked change arising from the carbon tax,” said Freehills partner and head of corporate Mike Ferraro. “It is a little early to make a complete read, but I’m not sure it will have a material impact on the M&A sector. Other factors are probably more important.”

According to Mallesons Stephen Jaques partner and head of the firm’s M&A team in Perth, Nigel Hunt, the carbon price is simply one more contributing factor among many making the market volatile. “In the long term it’s the sort of thing that will ultimately impact valuations more than whether a deal gets done,” he said.

The energy & resources (E&R) sector has been dominating the M&A sector since the start of the year, accounting for half of all listed company transactions worth more than A$100m. Despite the inevitable impact the carbon price will have on that sector, E&R is expected to continue thriving in M&A deals according to a Gilbert + Tobin M&A report. “Interestingly the demand for resources M&A remains, notwithstanding a mining tax, carbon tax, natural disasters and a mixed bag of economic news,” the report stated. Hunt agrees, adding that he is still seeing a very ‘strong’ resources theme in M&A deals. 

For many industries the high Australian Dollar is having a detrimental impact on business, yet this is not the case for M&A according to Hunt. “Chinese investors are making investment decisions which are based on much longer term resource security factors,” he said. According to Ferraro the high Australian Dollar coupled with a tighter regulatory market with regards to competition means more Australian companies will be looking overseas to expand or grow. “The strength of the Australian Dollar creates an impetus for Australian companies to look at and invest in businesses offshore,” he said. The G+T report agrees with Ferrero, stating: “We expect to see more foreign acquisitions by Australian companies in the second half of 2011.”

The state of the M&A Nation: 2011 mid year report by G+T was released on July 29.