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Takeover activity up again to decade high

Takeover activity on the NZX rose for the fourth consecutive year in 2017 to the highest level in a decade. Bell Gully Partner James Cooney looks at the trends.

Bell Gully has issued its annual Takeovers Update analysis of takeover activity on the NZX, detailing the eight takeovers launched during 2017.

"Not only was this the busiest year for takeover activity in the past decade, but the level of activity was approximately twice the average annual rate since the Takeovers Code came into effect in 2001,"  Bell Gully wrote in the report.

Of the eight takeovers, three were successful, four were unsuccessful and one is still in progress. The success rate of 43 percent from seven completed takeovers was well down on the historic average of 76 percent over the last 15 years. Two of the takeovers were successfully contested and one failed to obtain regulatory approval.

Bell Gully Partner James Cooney points to higher use last year of schemes of arrangement, with half of the eight structured as schemes of arrangement. See more in the video above. This puts New Zealand in line with Australia and significantly above the historic rate in New Zealand of seven percent. He explained in the video above why some takeover participants prefer such schemes to the traditional full takeover bid.

One example was Kee Logistics’ NZ$55 million acquisition of Fliway was conducted by way of a scheme of arrangement. Prior to this transaction, the average transaction value for the seven takeovers conducted by way of scheme of arrangement in New Zealand during the previous 15 years was NZ$1.3 billion.

"The Fliway acquisition demonstrates that schemes can be a viable method of conducting smaller takeovers," Bell Gully said.

Watch the video interview above

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