‘Volatility can create opportunity’: How the market downturn could spur a local M&A spree
Market watchers say trading uncertainty and depleted valuations have left the door open for opportunistic buyers.
Challenger’s move last week to reduce its takeover offer for non-bank lender Pepper Money due to “deteriorating” market conditions may have been the first sign that recent trading volatility is now flowing through to local M&A activity.
But some market watchers believe the uncertain backdrop could trigger more, not less, buying appetite.
“I’m sure there are some deals that are being worked on that have paused, but I would also think there are some buyers behind closed doors who are rubbing their hands together who intend to use this period of weakness to their benefit,” Luke Cummings, chief investment officer and managing director of M&A arbitrage fund Harvest Lane, told Capital Brief.
“If you’re someone who’s been contemplating an acquisition — whether you’re raiding the market for stock, whether you’re making an approach to boards — people would be a lot less bullish around valuation now than they would be a month ago.”
