Adviser spots more big deals

The forestry, energy and property sectors will underpin robust merger and acquisition levels this year, the top-ranked local advisory firm says.

Rob Hamilton, head of investment banking for First NZ Capital, sees a positive year for deals, following the huge rise in corporate activity recorded for last year.

"I think things will continue to be busy this year. I think there will be more deals in the forestry sector, more deals in energy and property would be a third one for a reasonable amount of activity."

A Thomson Financial international survey says announced mergers and acquisitions jumped almost 40 per cent last year to be valued at US$11.5 billion. The number of transactions rose to 348 from 292.

The value of completed deals also climbed, up 27.2 per cent to be worth US$9.8 billion with 250 deals, from 242 in 2003.

International giant Credit Suisse First Boston (CSFB) topped the advisory list for both announced and completed deals ranked by value. The firm advised on seven deals, including the three biggest announced transactions.

First NZ Capital - New Zealand's biggest locally owned brokerage and investment bank, and the representative of CSFB - was second in the announced deals value table, working on 13.

Deutsche Bank came second in the completed deals value table due to its role in six transactions.

The largest deal was Origin Energy's US$1.88 billion acquisition of a 51.22 per cent stake in Contact Energy. The second was the US$1.35 billion divestment of the herbs and spice division of Burns Philp, the majority-owned unit of Graeme Hart's Rank Group, to Associated British Foods.

Fonterra's unsolicited tender offer to acquire the remaining 82.8 per cent interest in Australia's National Foods it does not already own was the third largest deal, valued at US$1.03 billion. That deal is on tenterhooks at the moment with Philippine company San Miguel trumping the local bid.

Australian firms remained the keenest buyers, investing almost US$3.8 billion in local firms through involvement in more than 45 per cent of all announced deals.

Hamilton sees plenty to keep advisers busy this year.

"I think there will be more shakeouts in the energy sector overall, not just next year but over the next two to three years," he said.

He said a continuation of ownership rationalisation in the forestry sector was also on the cards, while the expected property sector activity would be a continuation of a trend set in Australia.

"I think we'll see some rationalisation [in the property sector] ... we've got too many small property companies in New Zealand."

Hamilton also picked a continuation of the Australian interest in local businesses but said New Zealand companies would also be looking for opportunities across the Tasman.