M&A activity could snowball after TPG deal

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Lawyer predicts further consolidation following TPG's takeover of iiNet.

Following last week’s announcement that TPG Telecom has proposed a $1.4 billion takeover of iiNet by scheme arrangement, Costas Condoleon, partner at Minter Ellison and lead partner on the deal, said the transaction may result in the further consolidation of telcos in the next 12 months.

“I think what it does is it consolidates TPG Telecom’s position in the sector, it will obviously be a larger group with a more vigorous position in the market and I think the market has been always expecting that there would be continued consolidation among the smaller members of the Telco community,” he said.

Condoleon added that other sectors may also see some consolidation in 2015.

“There’s some talk that there may be some consolidation in resources because with commodity prices coming off there will be some juniors who are going to find it increasingly challenging which might open up some more opportunities,” he said.  “There has been a lot of speculation about the property sector and that that may continue to see some transactional activity, and I think probably industrials generally.”

He said with the low Australian dollar, the time may be right for off-shore organisations to look to invest here.

“If you look at the macro settings, low interest rates suggest that you’ll probably see private equity being active in M&A, I think the low Aussie dollar probably means that you’ll see some sort of foreign capital coming in so off-shore organisations looking to acquire Australian entities,” he said.  “You would expect with the American currency strengthening so much that North American corporates will certainly be looking down under and then I guess within Australia, against a backdrop of that deal pressure, you might see some consolidation within certain sectors of the local market.”