Three of Australia's largest listed companies are set to leave the public markets as foreign buyers continue to pursue cheap assets from businesses opting to sell amid tougher economic conditions.
Swedish private equity firm EQT agreed on Monday to take over Cleanaway Waste Management in a deal valuing the Australian business at A$9.3bn (US$6.5bn), including A$2.3bn of debt. The offer carried a 32 per cent premium to Cleanaway's share price in August, before EQT launched a nonbinding agreement. Cleanaway chair Samantha Hogg said the board concluded the offer delivered "strong and certain cash value to shareholders at a significant premium" and recommended it. The move follows EQT's acquisition of the Melbourne Storm rugby league team in August and multiple bids for wealth manager Perpetual.
Japan's Dai-ichi Life launched a near-A$8bn offer to buy out retirement income company Challenger, after building a stake of more than 20 per cent last year. The offer, at a premium of about 20 per cent to Friday's closing price, will be considered by Challenger's board. A third deal was confirmed when Fleet Partners agreed to a A$1.1bn takeover from SG Fleet, owned by Pacific Equity Partners, after fighting off Japanese bidders. The final offer of A$5.30 a share followed an initial rebuffed approach at A$3.60 in July.
The deals follow growing foreign interest in Australian-listed assets, including Reliance Worldwide and Steadfast, which have agreed to multibillion-dollar takeovers by overseas funds. Gold miner Northern Star and education company IDP have rejected offers, while insurers IAG and Suncorp are reportedly in the sights of a Japanese suitor.
Ron Shamgar of Tamim Asset Management said the premiums being paid highlight a "massive gap" between private and public market valuations, driven by higher bond yields and interest rate rises. "It's a frenzy of deals," he said, expecting five to 10 more offers before Christmas. Morningstar analyst Esther Holloway said a pullback in equity markets had triggered the bids and considered EQT's offer for Cleanaway "fair," as environmental regulations limit new urban landfills and push companies toward recycling.
Source: Financial Times Companies · Summarized by HeadlinesBriefing