Relative resilience in Australia's M&A market

The global mergers and acquisitions (M&A) landscape in 2024 has been marked by a cautious yet steady recovery, with notable activity across key sectors, including industrials, mining, and infrastructure. Despite facing a range of macroeconomic challenges, deal-making has remained strong, with strategic acquisitions reshaping these critical industries.

A Year of Resilience Amid Uncertainty

In the industrial sector, global deal volumes dropped by 21% compared to the previous year, largely driven by economic volatility and geopolitical tensions. However, regions like Asia Pacific, including Australia, showed relative resilience. Despite a challenging macroeconomic environment, sectors such as aerospace, defence, and industrial manufacturing continued to experience consolidation, driven by technological advancements and sustainability goals.

The mining sector was a standout, with consolidation continuing in key commodities such as gold and copper. High gold prices and increased demand for copper, driven by the global push for decarbonization, fueled M&A activity. Notably, Newmont's AU$26 billion takeover of Newcrest and BHP's strategic moves in copper mining underscored the sector's attractiveness. As the world shifts toward renewable energy, copper remains a critical asset, and the sector is poised for further consolidation as companies seek to secure the resources required for the green transition.

In infrastructure, deals in waste management and transportation saw significant movement. Investors remained focused on core infrastructure assets, with a clear shift toward sustainability and green energy.

Looking Ahead: What to Expect

As we journey through 2025, the outlook for M&A activity in Australia remains positive, with several key trends expected to shape the industrial, mining, and infrastructure sectors.

1. Industrial Sector: The industrial sector is poised for a rebound in 2025, driven by easing inflationary pressures and rising confidence in the global economy. Increased M&A activity is expected in aerospace and defence, manufacturing, and logistics, with companies continuing to pursue acquisitions to improve operational efficiencies and adapt to evolving market demands. Advances in automation, artificial intelligence, and sustainability will be at the forefront of deal-making​ thematics.
2. Mining Sector: The mining industry will likely see further consolidation, particularly in gold and copper. As demand for copper and other critical minerals intensifies, Australian companies are expected to look abroad for growth opportunities. The focus on green energy and decarbonization will continue to drive M&A, with copper mining and lithium assets in high demand as part of the global push for renewable energy​.
3. Infrastructure Sector: The infrastructure sector is expected to see continued growth in 2025, particularly in green energy projects, waste management, and transportation. As governments and corporations prioritize sustainability, acquisitions in the renewable energy space are anticipated to increase. This trend will likely attract both private equity investors and infrastructure funds seeking long-term stable returns​.

Challenges and Opportunities in 2025

Despite our positive outlook, 2025 will come with its own set of challenges and opportunities:

• Regulatory Changes: A major shift in Australian merger laws will take effect in 2026, prompting a wave of M&A activity in the first half of 2025. Companies may look to fast-track deals to avoid regulatory delays under the new mandatory merger notification regime​.
• Private Equity Surge: Private equity firms are expected to ramp up their activity in 2025, particularly in the tech and infrastructure sectors. Increased availability of capital and more favorable borrowing conditions will likely drive deal-making, in addition to ongoing pressure to realise their own exits across portfolios.
• Distressed M&A: Economic pressure will increase the likelihood of distressed M&A transactions, presenting opportunities for buyers to acquire assets at attractive prices​.

Conclusion

2024 has proven to be a year of strategic consolidation in Australia, particularly in the industrial, mining, and infrastructure sectors. As we journey through 2025, M&A activity is expected to rise, driven by favorable market conditions, regulatory shifts, and a continued focus on sustainability. With an increase in private equity-backed deals and a renewed emphasis on green energy and decarbonization, the year ahead promises to be dynamic, with significant opportunities for both strategic and financial buyers.