Global markets have remained volatile for traders and investors these past few months, as growing debt and sluggish economic growth continues to plague Europe and the US.

However, despite the instability M&A activity in the Asia Pacific region has remained steady, and in some cases is thriving. In recent weeks major deals including the SABMiller bid for Foster’s and bids for Macarthur Coal have seen the value of M&A in Australia surge to more than A$15billion. “There has been volatility – but volatility in one form or another has been around for years,” said Freehills M&A partner Tony Damian. “Through all of that we have not really seen a decrease in interest in Australian targets or the propensity to do deals.”

Allen & Overy M&A partner Arron Kenavan agrees with Damian, adding that he expects to see a reasonably solid M&A market in Australia in the months to come. “Sensible deals will still get done,” said Kenavan. “Deals that are marginal or where the acquirer is not well capitalised, and needs to raise equity to get the deal done, might be a bit tougher but I think we will continue to see the strategic deals.” 

Australian corporates such as Qantas subsidiary Jetstar and the Westfield Group have also been taking advantage of the strong Australian dollar and economy by making investments overseas. The strength of the Australian economy and dollar are positives for both inbound and outbound M&A, says Damian. “I think the currency speaks for the fact that Australia is a terrific place to invest, and is doing well and continues to do well,” he said. The continued search for growth is also a factor contributing to the offshore M&A, added Damian. “There are still industries where there is room for domestic growth, but in some industries, especially with Asia on the doorstep it’s a natural decision to look overseas and I think we will continue to see more of that,” he said.

Two of the biggest sectors for M&A in recent years have been resources and agriculture and as long as there are companies and investors in those sectors looking to take long term strategic decisions Kenavan doesn’t see M&A work slowing.  “I don’t think the volatility will impact the acquirers of in those industries very much,” he said.

Related stories: M&A unaffected by carbon price & AUD, say lawyers 8 August 2011

Inbound M&A continues to surge ahead of outbound investments 29 June 2011