Public deal volumes increased to decade highs in 2024, with the largest transactions being the takeovers of Altium, Boral, CSR, Alumina, and PSC Insurance.
The average control premia increased to 57% in 2024 (vs 51% in 2023), which has underpinned healthy returns for the shareholders of acquisition targets. However, the total deal value decreased for the third consecutive year, and was relatively modest due an absence of ‘mega deals’ compared to prior years, which included the Sydney Airport (~A$25bn) and Newcrest (~A$24bn) takeovers in 2022 and 2023 respectively.
Looking forward, the outlook for M&A activity in 2025 is broadly positive and will be supported by several key macro factors:
- Lower interest rates – easing inflation and interest rate cuts from both the Fed and the RBA should give corporate and private equity investors more confidence in equity valuations and the broader macro outlook, which we expect to be supportive of M&A activity in 2025.
- Offshore deregulation – several political leaders in major offshore economies were elected last year on platforms of regulatory loosening, including in the US, Japan, and the UK. More business-friendly policies in these economies should support deal-making activity.
- Domestic M&A reforms – with significant M&A law reforms scheduled to come in effect on 1 January 2026, we expect acquirers to fast-track deals in 2025 before stricter regulation comes in place. Longer term, these reforms pose risks for businesses with domestic M&A driven growth (explored below).
- Weak AUD – the depreciation of the AUD relative to other major currencies, including the USD, has increased the takeover appeal of Australian companies from offshore parties by lowering effective acquisition prices in foreign currency terms (all else equal).
- Capital availability – after several years of transaction stagnation, the global private equity sector holds
near-record levels of 'dry powder' (cash), which should support renewed appetite for ‘take-privates’ from funds eager to deploy capital.
The key risks to M&A activity over the near-term include escalating global trade tensions led by the Trump Administration, ongoing conflicts in the Middle East and Ukraine, and the upcoming Australian Federal election.Nevertheless, considering the broadly supportive macro dynamics, we believe the environment is ripe for an acceleration in M&A activity on the ASX over the course of 2025.
The remainder of this report explores the key M&A themes that we expect to play out in 2025 and screens the ASX for potential takeover candidates. We also assess James Hardie’s recent A$14bn acquisition of US-listed AZEK and discuss the longer-term implications of looming domestic merger reforms for companies on the ASX.
Major Deals of 2024
Over the last year, there has been a healthy combination of ‘take-privates’ from the private equity sector, alongside strategic acquisitions from domestic and international corporates.
The resources sector saw the largest proportion of M&A deals on the ASX in 2024. This was driven by consolidation in the gold sector, as well as strategic acquisitions from global diversified miners which are expanding their presence into critical minerals such as copper and lithium – including Rio Tinto’s acquisition of Arcadium Lithium (held in the Focus Portfolio until October 2024).
| Target | Acquirer(s) | Deal value (A$bn) | Sector | Deal Type | Status |
| Top 10 largest completed deals of 2024 | |||||
| Altium | Renesas Electronics | $9,100 | IT | Strategic Acqusition | Completed |
| Boral | Seven Group | $6,700 | Materials | Strategic Acqusition | Completed |
| CSR | Compagnie de Saint-Gobain | $4,300 | Materials | Strategic Acqusition | Completed |
| Alumina | Alcoa | $3,300 | Resources | Resources Consolidation | Completed |
| PSC insurance | Ardonagh Group | $2,300 | Financials | Strategic Acqusition | Completed |
| Adbri | CRH | $2,100 | Materials | Private Equity Buyout | Completed |
| InvoCare | TPG | $1,800 | Consumer | Private Equity Buyout | Completed |
| Azure Minerals | SQM / Hancock Prospecting | $1,700 | Resources | Critical Minerals | Completed |
| United Malt Group | Maiteries Soufflet | $1,500 | Food & Beverage | Strategic Acqusition | Completed |
| Costa Group | Paine Scwhartz-led consortium | $1,500 | Food & Beverage | Private Equity Buyout | Completed |
| Unsuccessful deals in 2024 | |||||
| Santos | Woodside | $80,000* | Energy | Resources Consolidation | Talks ceased |
| Anglo American | BHP | $75,000 | Resources | Critical Minerals | Unsuccessful |
| Right Move | REA Group | $12,000 | Media | Strategic Acqusition | Unsuccessful |
| Noteable deals of 2025 (year to date) | |||||
| AZEK | James Hardie | $13,950 | Materials | Strategic Acqusition | Pending |
| Berry Group | Amcor | $13,000 | Materials | Strategic Acqusition | Pending |
| Arcadium Lithium | Rio Tinto | $10,700 | Resources | Critical Minerals | Completed |
| Chemist Warehouse | Sigma Healthcare | $8,800* | Healthcare | Reverse Merger | Completed |
| Insignia Financial | Brookfield, Bain, CC Capital | $3,400 | Financials | Private Equity Buyout | Pending |
| Domain Group | CoStar | $2,700 | Media | Strategic Acqusition | Pending |
| Spartan Resources | Ramelius Resources | $2,400 | Resources | Resources Consolidation | Pending |
| DeGrey Mining | Northern Star | $5,000 | Resources | Resources Consolidation | Pending |
| Dropsuite | NinjaOne | $402 | IT | Strategic Acqusition | Pending |
| Smartpay | Tyro Payments | $220 | Financials | Strategic Acqusition | Pending |
| Pointsbet | Betr | $360 | Consumer | Strategic Acqusition | Pending |
*Combined value of merged entities at the date of deal announcement. Bolded companies are ASX-listed. Source: Company filings, Wilsons Advisory.
M&A Themes For 2025
Looking ahead, we expect M&A activity to be concentrated across four key areas in 2025 and over the medium-term:
1. Continued resources sector consolidation
M&A activity should remain robust across the copper space over the medium-term. BHP’s recent bids for Anglo American (failed) and Filo Corp (JV with Lundin Mining) has highlighted the desire of the majors to expand their exposure to critical minerals (particularly copper) in light of the attractive medium and long-term supply/demand dynamics. We also expect further consolidation within the gold sector, as players push for greater scale (and investor relevance) at a time that the commodity is in favour due to its ‘safe haven’ attributes.
2. Healthcare – clinical stage biotechs, private hospitals
We expect healthy M&A interest across the healthcare sector from both private equity and big pharma players. It is possible that private equity opportunistically returns to the private hospital sector given the mounting pressures on industry profitability. Elsewhere in the sector, we expect to see a continuation of M&A interest from big pharma in clinical stage biotechs, including in the radiopharmaceutical space.
3. Infrastructure / ‘infrastructure-like’ assets
After substantial M&A activity in recent years – including the acquisitions of Sydney Airport, AusNet, and Spark Infrastructure – institutional demand for quality infrastructure assets remains high. This was seen most recently with Mineral Resources’ Onslow Haul Road 49% sale to Morgan Stanley Infrastructure Partners. With a scarcity of pureplay infrastructure remaining listed on the ASX, we could also see increased M&A interest in ‘infrastructure-like’ businesses.
4. Beaten down small/mid caps
Small and mid cap valuations are attractive relative to history, with the ASX Small Ords Index trading at a 4% discount to the ASX 100 on a PE basis, which compares to its ten-year average premium of ~10%. The combination of attractive valuations, interest rate cuts, and the weak AUD should support M&A interest in this part of the market over the medium-term.
In Figure 6, we highlight potential M&A targets across the ASX in line with these themes.
| Company | Ticker | Share price change | Valuation | ISG view - M&A angle | ||||
| last 12 mths | year to date | PE (EV/EBITDA*) | % vs 12 mths ago | %vs 5yr avg | ||||
| Resources sector consolidation | ||||||||
| Sandfire Resources | SFR | 32% | 26% | 16.0 | -29% | -16% | M&A activity in the copper market is being driven by the tightening supply/demand balance driven by energy transition demand and a lack of new copper discoveries. The global diversified miners (BHP, Glencore, Anglo American) have expressed an eagerness to expand their critical minerals’ footprints, which should drive M&A as it becomes clear that there are not enough copper mines under development to meet future demand (particularly among pureplay copper producers with significant latent resource potential). |
Focus Portfolio holding |
| MAC Copper | MAC | -15% | -1% | 15.8 | - | - | Focus Portfolio holding | |
| Capstone Copper | CSC | - | -2% | 18.4 | - | - | Wilsons Research O/W | |
| Evolution Mining | EVN | 97% | 42% | 13.6 | 30% | -8% | The ASX gold sector continues to consolidate as producers look to gain scale and increase investor relevance. Following the Newmont/Newcrest and Northern Star/De Grey mergers, EVN should stand-out to a number of potential suitors (likely offshore gold/diversified miners) given its diversified asset portfolio, attractive free cash flow build, and falling level of gearing. |
Focus Portfolio holding |
| Healthcare | ||||||||
| Clarity Pharmaceuticals | CU6 | -11% | -40% | nm | nm | nm | CU6's portfolio of radiopharma assets (such as Cu-SAR-bisPSMA) could attract M&A interest from big pharma players, who have been active in the sector in recent years. With Lantheus' PLARIFY PSMA product currently losing share to Telix's ILLUCCIX, Lantheus may benefit from acquiring or partnering with CU6. |
Wilsons Research O/W |
| Neuren Pharmaceuticals | NEU | -39% | 0% | nm | nm | nm | NEU has been successful with DAYBUE and has a strong pipeline (particularly NNZ-2591) which is seeing strong data in trials. Biotech companies with attractive |
Wilsons Research O/W |
| Monash IVF | MVF | -23% | -13% | 13.2 | -24% | -12% | After a series of M&A transactions in the Australian IVF sector in recent years, MVF is the sole non-PE owned IVF provider still listed on the ASX. MVF has key appeals for PE buyers - including favourable industry dynamics (subsidisation, growth in IVF usage/success rates) and a track record of defensive growth through the cycle. |
Wilsons Research O/W |
| Ramsay Healthcare | RHC | -38% | -1% | 23.1 | -25% | -16% | RHC has received takeover interest from KKR previously. The strategic review of its non-core European hospitals could pave the way for renewed interest in the company. After a tough period for the private hospital sector which has weighed on RHC's share price, there is the potential for an opportunistic approach. With profitability under pressure, RHC has clear 'cost-out' and asset monetisation opportunities for PE suitors. |
Wilsons Research M/W |
| Infrastructure / ‘infrastructure-like’ assets | ||||||||
| APA Group | APA | -5% | 13% | 10.9* | -4% | -11% | APA was subject to a bid from CKI in 2018. The stock de-rated significantly over the last 3 years, which could spur renewed takeover interest. While elevated gearing levels may deter buyers, APA's high quality monopoly asset portfolio, regulated/contracted cash flows, and organic growth pipeline should be key appeals to institutional capital. APA may benefit from being taken private from an ESG perspective. |
|
| Transurban | TCL | -2% | -3% | 22.5* | 0% | -6% | TCL's toll roads are regulated assets that are local monopolies. these long-term concession agreements with embedded inflation-protection driving steady cash flows through the cycle. While TCL's sheer size may deter potential bidders, the appeal of high-quality infrastructure assets remains high for super funds. |
|
| The Lottery Corp | TLC | -6% | -2% | 15.9* | -4% | -1% | While TLC it not an infrastructure business, it has 'infrastructure-like' characteristics including a defensive underlying demand profile and long-dated monopoly licences, which underpin relatively defensive cash flows through the cycle. With pureplay infrastructure being scarce on the ASX, it is possible that super funds look to TLC as a potential takeover target. |
Focus Portfolio holding |
| Beaten down small/mid caps | ||||||||
| Readytech | RDY | -23% | -17% | 19.2 | -13% | -4% | RDY has received M&A interest previously from PEP in late 2022. Following weakness in RDY's share price, it may again be on the radar of PE, with the business having clear 'cost-out' opportunities for potential acquirers. |
Wilsons Research O/W |
| OFX Limited | OFX | -31% | -18% | 7.8 | -27% | -53% | OFX's major peers are private equity owned, demonstrating the inherent 'private equity appeal' of the sector. We also see the potential for a competitor to acquire OFX for strategic reasons (to reduce competition and extract synergies). |
Wilsons Research O/W |
Source: Refinitiv, Wilsons Advisory.
M&A Spotlight: James Hardie / AZEK Merger: Building a US Market Leader
James Hardie (JHX) is held in the Focus Portfolio at a weight of 4%
This week, James Hardie (JHX) announced a proposed A$14bn merger with AZEK, which is the second largest US manufacturer of residential composite decking and related products (railings, pergolas, porch, fasteners, and lighting). The deal will be scrip and cash funded and will result in JHX shareholders owning 74% of the combined group.
The negative initial market reaction to the deal likely reflects the high valuation multiple (implied FY26 PE of 34x), scepticism around the likelihood of JHX delivering on targeted synergies, and concerns that JHX is reducing its exposure to its high-ROIC core product, fibre cement.
Notwithstanding these concerns, JHX has guided that the transaction will be cash EPS accretive in the first full fiscal year after the closing of the transaction.
AZEK – another secular growth story
The strategic rationale of the merger is sound in our view. The deal will expand JHX’s total addressable market, diversify its product mix into a more holistic building materials offering, and increase its exposure to the US repair & remodel market where long-term fundamentals are attractive.
While the merger will dilute JHX’s revenue exposure to fibre cement, which has been central to its growth story, AZEK’s composite decking product is demonstrating impressive secular growth as well.
Like JHX’s fibre cement, AZEK’s TimberTech decking has been taking market share as customer preferences shift from wood to composite decking solutions due to its superior value proposition (lower maintenance requirements, greater resilience against fire/pests/weather events).
The ‘material conversion’ opportunity for both fibre cement sidings and composite decking remains large, at ~78% and ~76% respectively.
Deal synergies
JHX expects to deliver EBITDA synergies of US$350m+ over the next five years, driven by:
- US$125m+ in cost synergies: across manufacturing and procurement, commercial, R&D, and administrative functions. Given the natural overlap in SG&A functions, cost synergies should be relatively straightforward to extract by streamlining processes and footprints.
- US$225m+ in commercial synergies: JHX expects to accelerate its revenue / EBITDA growth by capitalising on cross-selling opportunities across JHX and AZEK’s products and channels. JHX notes that ~55% of siding contractors also do decking and ~55% of homeowners completed decking and re-siding projects at the same time. The consensus view on JHX’s ability to achieve its targeted commercial synergies is somewhat cautious in light of the uncertain macro environment.
Ultimately, JHX’s delivery against its targeted synergies will be key to the ultimate value creation of the deal. The failure to deliver against expected synergies will likely render the deal dilutive to JHX shareholder value given the consideration paid to acquire AZEK.
James Hardie offers attractive value after the sell-off
While we acknowledge the market’s caution around the AZEK merger, the extent of the sell-off in JHX’s share price has been excessive. JHX now trades on a 12-month forward PE multiple of ~14x, which is a ~30% discount to its five-year average (~21x) and a ~26% discount to the ASX All Industrials (~19x).
Notwithstanding the inherent uncertainties and integration risks associated with the merger – which could take some time for the market to digest – at current levels, JHX offers highly attractive value considering the quality of the business and its consensus EPS CAGR of ~14% over FY26/7.
| James Hardie | AZEK | Benefits of merger | Combined company | |
| Net Sales | US$3.9bn globally (11% yr CAGR) | US$1.5bn+ total (15% yr CAGR) | ~US$500m+ commercial synergies | US$5.9bn |
| Adjusted EBITDA margin | ~28% | ~26% | ~300bps+ including total run-rate synergies | 31% with further expansion |
| Adjusted EBITDA | US$1.1bn (14% 7yr CAGR) | US$390m (16% 7yr CAGR) | US$350m+ total synergies | US$1.8bn+ |
Source: James Hardie Investor Presentation (24/3/2025), slide 6, Wilsons Advisory.
Merger Reforms to Constrain Acquisition-led Growth
The biggest overhaul to Australian M&A laws in decades
After the Treasury Laws Amendment (M&A Reform) Bill was passed in parliament last year, new merger rules will take effect on 1 January 2026, which marks a significant shift from a voluntary notification regime to a mandatory and suspensory merger control regime.
The new laws will make it mandatory to inform the ACCC of acquisitions that trigger certain financial thresholds, which will then need to be approved before deals can proceed. The failure to obtain approval will render acquisitions void and result in significant penalties.
In essence, the new regime is likely to capture many more deals (irrespective of competition concerns), involve longer reviews on average, and substantially increase the upfront process complexity (and compliance costs) of seeking ACCC clearance. This could result in significant delays to transactions and has arguably reduced the domestic M&A runway across several sectors.
Implications for the ASX
The merger reforms pose the greatest medium-term threat to companies with domestic acquisition-led growth strategies. Steadfast (SDF) was recently removed from the portfolio, partly due to concerns around its ability to conduct bolt-on acquisitions, which have been a key pillar of its EBITA growth historically.
Key sectors/companies on the ASX that have historically driven growth through domestic bolt-on / roll-up M&A strategies that could face headwinds from the new legislation include:
- Insurance Broking – Steadfast (SDF), AUB Group (AUB).
- General Industrials – Reece (REH), Reliance Worldwide (RWC), Cleanaway Waste Management (CWY), Johns Lyng Group (JLG), Kelsian Group (KLS), Propel Funeral Partners (PFP), G8 Education (GEM), Eager Automotive (APE), PWR Holdings (PWH), IPH Limited (IPH).
- Healthcare Services – Australian Clinical Labs (ACL), Sonic Healthcare (SHL), Integral Diagnostics (IDX), Monash IVF (MVF).
- Conglomerates – Wesfarmers (WES), SGH Limited (formerly Seven Group) (SGH), Infratil (IFT).
- Consumer Staples – Endeavour Group (EDV), Metcash (MTS).
- Challenger Telcos – Australian Broadband (ABB), Superloop (SLC).
There are no companies currently held in the Focus Portfolio that will be meaningfully impacted by the reforms. While WiseTech (WTC), CAR Group (CAR), WEB Travel (WEB), and Collins Foods (CKF) have used M&A strategically in the past, acquisitions are not central to their earnings growth outlooks. Moreover, incremental acquisitions from these businesses are likely to be concentrated offshore and therefore not subject to the domestic merger reforms.
Written by
Greg Burke, Equity Strategist
Greg is an Equity Strategist in the Investment Strategy team at Wilsons Advisory. He is the lead portfolio manager of the Wilsons Advisory Australian Equity Focus Portfolio and is responsible for the ongoing management of the Global Equity Opportunities List.
About Wilsons Advisory: Wilsons Advisory is a financial advisory firm focused on delivering strategic and investment advice for people with ambition – whether they be a private investor, corporate, fund manager or global institution. Its client-first, whole of firm approach allows Wilsons Advisory to partner with clients for the long-term and provide the wide range of financial and advisory services they may require throughout their financial future. Wilsons Advisory is staff-owned and has offices across Australia.
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