More takeovers on the way

There’s a feeling in the market that the merger and acquisition activity sweeping the world has bypassed Australia. That may not last long.

Despite high valuations on the our stockmarket, cheap finance, a struggling but stable economy accompanied by a lower currency has many global investment houses doing the sums on leading Australian resource and industrial stocks.

Only this week Treasurer Joe Hockey was forced to tell a private meeting he wouldn’t allow a takeover of Rio Tinto -one of the biggest miners in the world – by Glencore one of the biggest commodity traders in the world and a substantial miner in its own right.

It came as oil and gas major Royal Dutch Shell agreed to acquire BG Group for 47 billion euros (more than $A65 billion) to give Shell a bigger gas footprint on Australia’s coal seem gas export industry.

This immediately got the market interested key Australianf energy heavyweights particularly Santos which been knocked down by collapse of oil and gas prices.

On the consumer side Myer keeps being putting in the frame as markets expect more bad news from the retailer before new management can turn the department stores around.

This speculation comes within a year of rival David Jones finally falling into the arms of South African and global giant Woolworths.

And just as Australia’s biggest takeover in many years, that of Toll Holdings by Japan Post for a cool $A6.5 billion is being finalised comes news of FedEx Corp’s €4.4 billion ($A6.3 billion) tilt at Dutch parcel-delivery company TNT Express NV. This will also have an big impact on the parcel delivery business in Australia.

Overseas the $US46 billion ($60.2 billion) proposed merger of HJ Heinz and Kraft Foods Group is another deal recently announced.

With the inclusion of this week’s flurry of global transactions, total announced M&As now amount to $US997.4 billion so far this year, according to Dealogic. There have been 14 announced transactions of more than $US10 billion in 2015, the most by number since 2006.

Most deals have been concentrated in the United States as that country’s economy continues to improve.

Experts believe that with interest rates in the US still at historically low levels, but predicted to rise later this year, now is the time to go for growth via takeover. Very low commodity prices worldwide have also shone the light on depressed mining and energy stocks that may be approaching the bottom of their cycle.

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