Failed Acquisitions Highlight Australia's Deal Challenges

In recent years, Australia has witnessed several high-profile acquisition deals that ultimately fell through, highlighting the challenges faced in completing major transactions in the region. These obstacles include disagreements over valuation, high stockholder approval thresholds, and regulatory risks.

One of the most recent examples is the failed acquisition of Santos, an Australian natural gas producer, by a consortium led by the Abu Dhabi National Oil Company (ADNOC). After months of negotiations over valuation and terms, the consortium withdrew its $18.7 billion offer. The consortium cited multiple factors that influenced their assessment of the indicative offer, while Santos accused the consortium of refusing to agree on fair risk sharing, including the responsibility for obtaining regulatory approval and committing to domestic gas development and supply.

Another significant failed acquisition involved BHP Group, the world's largest mining company. In May 2024, BHP abandoned its plan to acquire Anglo American, a rival mining company, for $49 billion after three rejected takeover bids. The primary reason for the failure was BHP's proposed transaction structure, which required Anglo American to split its South African platinum and iron ore businesses. At the time, BHP valued Anglo American at $29.34 per share, but the current share price stands at $25.18.

In early 2024, Woodside Energy, an Australian energy company, terminated merger talks with Santos. The two companies had planned to combine and form a global oil and gas giant with a market value of up to $80 billion Australian dollars (approximately $53.15 billion). The talks collapsed due to disagreements over valuation.

In late 2023, Brookfield, a Canadian investment company, and MidOcean Energy jointly proposed a $10.6 billion acquisition of Origin Energy, an Australian energy retailer. The deal failed to gain the necessary approval, with only 69% of Origin Energy shareholders voting in favor, falling short of the 75% legal threshold. Brookfield's offer was $9.53 per share, while the current share price is $12.41.

In 2023, Albemarle, a U.S. mining company, abandoned its $6.6 billion Australian dollar (approximately $4.39 billion) acquisition of Liontown Resources, an Australian lithium miner. The deal faced increasing complexity, and Albemarle's proposed acquisition price was $3 per share. The current share price of Liontown Resources is $0.91.

In 2022, a consortium led by KKR & Co., a private equity firm, withdrew its nearly $13 billion offer to acquire Ramsay Health Care, an Australian hospital operator. The negotiations stalled, and Ramsay Health Care stated that the consortium decided not to increase its offer due to the company's weak performance. The consortium's offer was $88 per share, while the current share price is $32.95.

These failed acquisitions underscore the complexities and challenges involved in completing major transactions in Australia. Disagreements over valuation, regulatory hurdles, and the need for high levels of shareholder approval continue to pose significant obstacles to successful acquisitions in the region.