Australian M&A delivers groundbreaking year

M&A activity down under reaches unprecedented highs as decarbonization and digitalization drive the dealmaker agenda

Australian M&A returned to full power in 2021, following a dip in activity in 2020 as the pandemic took hold. Deal activity within the country exceeded even the most ambitious predictions, with a total of US$256 billion in deals announced during the year, far and away the highest annual value on record—more than doubling 2007’s previous high.

Deal volume also was impressive, with 785 deals easily surpassing 2018’s previous record of 643 transactions.

Unsurprisingly given the record deal value, megadeals are at an all-time high in Australia. There were 11 deals with a value of over US$5 billion announced in 2021 worth a combined US$157.3 billion —the highest annual value and volume on Mergermarket record. The top three announced deals of the year all had a value of more than US$20 billion, signaling a boom in confidence in the Australian deal market.

TMT sector attracts historic deal

TMT continued to be the most targeted sector by volume, with 183 announced deals doubling 2020’s previous high. The sector attracted the highest valued deal of the year: the acquisition of buy now, pay later (BNPL) provider Afterpay by US payment firm Block Inc. (previously known as Square). With a value of US$26.7 billion, the deal is the largest takeover in Australia’s history.

Appetite for BNPL providers such as Afterpay, which provide small unsecured loans to consumers at no cost while charging merchants a fee to process transactions, boomed during the pandemic due to a surge in online payments. In the 12 months up to June 2021, Afterpay revenues doubled to an estimated A$519.2 million, while its number of active customers reached 10 million. 

Energy transition sparks deals

On the back of some mammoth transactions, the energy, mining and utilities (EMU) sector attracted the highest total deal value across all sectors in 2021. EMU M&A value nearly quadrupled year-on-year to reach US$64.8 billion—the highest annual value on record.

The largest deal within the sector was Anglo-Australian mining group BHP Group’s divestment of its oil and gas business to Woodside Petroleum for US$13.7 billion. The move from the world’s largest mining group represents a growing shift in the global energy industry, as global players continue their transition toward clean energy sources in a bid to align with the Paris climate agreement.

The growth of Australia’s renewables market prompted another landmark transaction of 2021: the US$13.3 billion takeover offer for electricity and gas distribution company AusNet by a consortium including Brookfield Asset Management.

Brookfield and its partners plan to invest heavily in AusNet’s electricity generation, preempting the rising demand for electric vehicles and also a shift of household heating from gas to electricity.

Buyout groups target Australian potential 

In line with global trends, private equity activity also soared in Australia in 2021. Total buyout value targeting Australian firms sky-rocketed to US$71 billion in 2021—more than four times 2018’s previous record high of US$17.5 billion. Deal volume also jumped from 72 to 105 year-on-year, reaching the highest annual figure on record.

US buyout firms were particularly active, as seen in the US$4.6 billion acquisition of energy investor Spark Infrastructure by a consortium led by KKR. Spark’s portfolio of electricity transmission and distribution networks is perceived as a high-growth area as the country transitions away from coal towards a low carbon economy.

Australian firms bet on overseas deals

While increasingly the target of overseas deals, Australian firms have also become more confident investing outside of their borders. A total of 149 outbound deals were carried out by Australian firms over the course of 2021—a post-crisis high.

The largest of these deals took place within the pharma sector: Biopharma firm CSL’s US$11.8 billion takeover of Swiss pharma group Vifor. The deal will see CSL diversify its portfolio through the addition of ten commercialized products.

Yet it was the energy, mining & utilities sector that saw the greatest investment from Australian dealmakers, with US$24 billion-worth of overseas deals taking place—the highest figure since 2006.

Investment firms such as IFM Investors were especially active in the sector, acquiring a minority stake in Spanish energy group Naturgy Energy through its Global Infrastructure Fund. At the time of the deal, Naturgy had a portfolio of 4.6GW of renewable energy capacity, including wind, solar and hydro-electric. The investment, valued at US$2.8 billion, is seen as a bet of confidence in Spain’s renewables sector and further evidence of the move towards the energy transition.


Given Australia’s hard-fought battle with the COVID-19 pandemic, the level of dealmaking seen in 2021 has been unprecedented. A closer look at macroeconomic trends goes some way in explaining this boom in activity: Australia’s economy weathered the COVID storm better than most, rebounding sharply in 2021 as effective COVID measures boosted consumer and business confidence.

Financing for deals is also cheap and readily available. These low funding costs, combined with pent-up demand following the worst of the pandemic, have resulted in a strong pipeline of deals.

With the wind in its sails, Australian dealmaking looks set to continue its winning streak into 2022, with decarbonization and digitalization setting the M&A agenda.

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