ASX small cap M&A activity has dried up in 2020

Small cap Merger and Acquisition (M&A) activity on the ASX has plummeted in the first half of 2020 compared to the same period last year.

The $2.6 billion in M&A among small caps on the ASX since the start of January this year is down ~40 per cent on the same period last year ($4.2 billion).

While the entire Australian M&A market is a larger $22 billion for 2020 so far, this is still the worst first half of a calendar year since 2003.

Investor appetite has improved since March, and most companies have been able to raise capital to stay afloat, and yet global stock markets are still in negative territory in 2020. The outlook also remains foggy.

In such uncertain economic times, a takeover bid would appear a match made in heaven.

This has been a common selling point by recipients of M&A deals, but shareholders are not guaranteed to agree.

This morning, Zenith Energy (ASX:ZEN) warned its shareholders its acquisition offer from Pacific Equity Partners may not proceed, due to a substantial number of shareholders voting against the deal.

As of this morning, 19.6 million shares (representing 22.25 per cent of eligible votes) had voted down the deal notwithstanding majority support.

Here are all the completed takeovers among ASX companies (with market capitalisations below $1 billion) completed between 1 January and 13 July 2020:

Swipe or scroll to reveal the full table. Click headings to sort.

Completion/Termination Date Target Name Acquirer Name Announced Total Value ($M) Payment Type
18/2/20 Royalco Resources Ltd Fitzroy River Corp Ltd 4.25 Cash
20/2/20 Azumah Resources Ltd Ibaera Capital Fund GP Ltd 28.62 Cash
21/2/20 CSG Ltd FUJIFILM Holdings Corp 356.19 Cash
24/2/20 Webster Ltd Public Sector Pension Investment Board 716.11 Cash
25/2/20 QMS Media Ltd Quadrant Private Equity Pty Ltd 737.44 Cash
13/3/20 Nzuri Copper Ltd Chengtun Mining Group Co Ltd 105.4 Cash
14/4/20 National Veterinary Care Ltd Australian Veterinary Owners League Pty Ltd 283.4 Cash
18/5/20 Stanmore Coal Ltd Golden Energy & Resources Ltd 54.79 Cash
30/6/20 Windlab Ltd Federation Asset Management Holdings Pty Ltd,Minderoo Group Pty Ltd 55.46 Cash
6/7/20 Universal Coal PLC Terracom Ltd 115.93 Cash and Stock
9/7/20 Horizon Gold Ltd Zeta Resources Ltd 3.27 Cash
5/7/20 Spectrum Metals Ramelius Resources 187.12 Cash

The most notable deals

More than half of the total ($1.4 billion) is made up of two deals over $700 million; namely the snap ups of agriculture company Webster (ASX:WBA) and digital media play QMS Media (ASX:QMS)

Another notable takeover was gold explorer Spectrum Metals (ASX:SPX) being bought by large cap miner Ramelius (ASX:RMS).

Other acquisitions included vet practice operator National Veterinary Care (ASX:NVC), renewable energy play Windlab (ASX:WND) and IT play CSG (ASX:CSV).

In addition to these deals, two more are pending but likely to proceed.

Namely, 88 Energy’s (ASX:88E) bid for XCD Energy (ASX:XCD) and Web.com’s offer to Webcentral Group (ASX:WCG)the latter of which was only announced this morning.

 

 

 

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