M&A Watch: Here are the deals bankers are working on right now
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Its been a good year for M&A bankers in the small cap space. Activity is up 23 per cent compared to last year. But those are just the deals that have been completed.
Another three deals worth $179 million are being negotiated or proceeding at present.
The biggest deal is a $100 million takeover of AustSino Resources (ASX: ASR) by Western Australia Port Rail (Shanghai) but it actually looks the furthest away.
It still has to be approved by the Foreign Investment Review Board among various other approvals required. The companies are keen to do the deal but admit there is no guarantee the deal will be done.
The deadline is December 31 and the biggest impediment will be getting money out of China. Part of these proceeds will be invested in African-focused iron ore explorer Sudance Energy (ASX: SDL).
Canberra casino operator Aquis Entertainment (ASX: AQS) has signed off on a deal to be acquired by Michael Gu’s Blue Whale Entertainment for $55 million but this is yet to go ahead.
Copper and cobalt explorer Gindalbie Metals (ASX: GBG) was suspended from trading last week as Ansteel Group bought it for $25 million. As part of the deal, some assets will be spun out into a new company and others will be taken by Ansteel. It will be some weeks until the deal is complete.
Of course, deals cannot go ahead without shareholders’ consent and deals can suddenly pop up out of the blue.
If directors approve of the takeover bid it is inevitable the deal will go ahead. But if they don’t (and the bidder does not back down) a saga worthy of a Netflix drama can eventuate. But how should you decide for yourself?
Niv Dugan from Peak Asset Management told Stockhead: “For shareholders, it is important to address the ‘premium’ that you would receive above the 15 or 20-day VWAP.
“Each sector would attribute a relative ‘risk-matrix’, so it is important that investors assess whether this would be ‘fair-value’ and would be in the best interests of the company.”
He also told Stockhead M&A activity has been ripe in 2019 and more could be to come due to economic conditions.
“A lower interest rate environment, combined with a pick-up in consumer and business confidence and certainty following the election has led to the pick-up in M&A activity,” he said.