BHP, Critical minerals, Mineral Resources, Newcrest, Newmont, News, Norwest, OZ Minerals, Quarterly and half yearly results, Takeover bids

March quarter big for mergers


Australia has become the hot spot for mergers and acquisitions (M&A) within the resources sector for the March quarter of the 2023 financial year.

As reported by Reuters, Australia saw $37 billion worth of M&A deals in the first quarter, with the trend expected to continue throughout the year.

Last week saw Newmont make its best and final offer for Newcrest, which was an overall valuation of $29.4 billion with an implied value of $32.87 per share. Reuters said the offer helped drive a 192 per cent surge in inbound M&As into Australia so far.

Last week also saw the Australian Federal Court approve BHP’s $9.63 billion takeover of OZ Minerals as the final step in completing the acquisition, with the takeover expected to be implemented on May 2.

Mineral Resources recently acquired over 80 per cent of Norwest shares and Wyloo Metals made a $760 million offer to Mincor Resources, saying the offer is best and final, with further movement yet to be made.

These are just a few examples of recent mergers and acquisitions taking place in Australia, but why are they happening so frequently?

Reuters said the increase in deals between mining companies has been mainly supported by cash-rich miners looking to expand quickly to keep up with the rising resource demand.

Additionally, carrying out mergers and acquisitions is an opportunity for mining companies to divest its fossil fuel portfolios and to be positioned at the forefront of the green energy transition.

Partner at Herbert Smith Freehills, a law firm, Kam Jamshidi told Reuters a perfect storm is brewing in resources M&A.

“Most powerfully, portfolio redesign for the energy transition is in full swing,” Jamshidi said.

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