Australia

There are several well-established structures for M&A. The optimal structure turns on whether the target is private or public, whether the approach is friendly or hostile, deal certainty, desired speed of execution, tax and regulatory considerations.

The sale and purchase of private companies proceed as either:

• a share acquisition — shares are purchased directly, or indirectly via the purchase of shares in a non-Australian parent entity; or
• an asset acquisition — a business’s assets are purchased and selected liabilities are assumed.

For public companies, the two primary structures are a members’ scheme of arrangement under Part 5.1 and a takeover bid under Chapter 6 of the Corporations Act 2001 (Cth).

A scheme of arrangement is a court-supervised, target-driven process for the acquisition of 100% of the target’s shares. It must be approved by 75% by value and 50% by number of each class of securityholders present and voting at the scheme meeting, and then approved by the court. It requires the cooperation of the target for documentation, disclosure and court steps, so is only used on a friendly basis. Its binary “all or nothing” result for bidders means a scheme is the most common structure for whole company acquisitions.

A takeover bid is similar to a “tender offer” overseas, which can be pursued on either a friendly or hostile basis. It is an offer to each individual securityholder of a listed company to purchase their securities in the target, and may be an off-market or on-market bid. Off‑market bids may be subject to conditions (e.g. minimum acceptance, regulatory approvals and no material adverse change) and offer cash and/or scrip. On-market bids must be cash only and unconditional, so they are rarely used.

An interesting development has been the emergence of a dual-track structure, where a bidder launches a concurrent scheme and takeover offer. The takeover offer is typically priced slightly below the scheme consideration and is conditional on the scheme vote’s failure. This structure is most commonly used where an existing shareholder holds a stake large enough (e.g. 10–20%) to potentially block the scheme, but not large enough to defeat a takeover bid subject to a 50% minimum acceptance condition.

Unlike jurisdictions such as the United States, Australia does not have a statutory merger or amalgamation mechanism that effects universal succession by operation of law.

Despite macroeconomic headwinds, the market was resilient in 2025, maintaining momentum throughout the year. Announced M&A involving Australian-based targets totalled USD 93.5 billion, the highest since 2021, and deal volume was 9% higher than in 2024 according to Mergermarket data.

Australian M&A continues to be shaped by a diverse investor base, with private capital assuming an increasingly prominent role alongside corporate acquirers. Foreign bidders remain highly active and continue to account for a substantial portion of M&A activity, particularly investors from North America, Japan, Singapore, the UK and Europe. Cross-border transactions have been supported by favourable exchange rate dynamics and a sustained appetite for high-quality Australian assets.

Sector activity in 2025 was led by mining, real estate/property, transportation, technology and utilities and energy. Continued investor appetite was also evident in the healthcare and financial services sectors.

Shareholder activism

Shareholder activism in Australia has surged, with institutional investors becoming increasingly sophisticated and assertive, and has included:

• requisitioning shareholder meetings or leveraging votes against executive remuneration reports under Australia’s “two strikes” regime to change boards and management of Australian Securities Exchange (ASX)-listed companies;
• launching public campaigns to oppose major acquisitions and/or demand strategic realignment;
• proposing amendments to the company’s constitution to constrain board discretion; and
• accumulating blocking stakes in ASX-listed companies to prevent or frustrate announced public M&A transactions.

Environmental and social issues have also emerged as a central dimension of shareholder activism, reflecting broader societal focus on climate change mitigation and environmental sustainability.

Strategic priorities

Driven by intensifying global competition, rising foreign investment and heightened geopolitical risk, sovereignty has also been emerging as a key M&A theme. Renewed emphasis on domestic manufacturing, onshoring and supply-chain resilience drives consolidation and investment in local production facilities. While traditional tools such as foreign investment screening and contractual protections remain central, governments are more willing to supplement them with direct governance rights embedded in tailored equity arrangements to safeguard sovereign interests in strategically sensitive sectors.

Following the issuance of a “Golden Share” by U.S. Steel to the U.S. President, a similar “Sovereign Share” was issued by ASX-listed defence shipbuilder Austal Limited to the Commonwealth of Australia, granting it bespoke governance rights, including a call option under certain circumstances over a subsidiary responsible for delivering critical defence infrastructure.

At the same time, access to gold and to critical minerals including rare earths, copper, nickel, cobalt and lithium has also become a strategic priority for many governments, fuelling joint ventures, acquisitions and long-term offtake arrangements aimed at securing reliable domestic and allied supply. Notable transactions in 2025 were:

• Northern Star Resources’ acquisition of De Grey Mining for AUD 6.1 billion; and
• GoldFields Limited’s acquisition of Gold Road Resources for AUD 3.7 billion.

A more demanding regulatory environment is shaping M&A. Dealmakers will be under heightened scrutiny from the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB), as legislative reforms and geopolitical sensitivities reshape the approval landscape. 

The shift from Australia’s voluntary “informal” clearance framework to a mandatory, suspensory merger control regime (effective 1 January 2026) captures more transactions, eliminates the scope for unconditional bids, lengthens timelines and increases execution risk.

The FIRB’s recent reforms have emphasised a risk-based assessment approach and increased scrutiny of sensitive sectors deemed critical to national security. It will continue to impose strict conditions, including tax conditions, with the Australian Taxation Office increasingly active in reviewing private equity transactions and their structuring.

The recent failed take-private of Mayne Pharma Group Limited by Cosette Pharmaceuticals, Inc. highlighted the targets’ limited ability to influence the outcome of acquirers’ regulatory processes. Consequently, target boards will seek increased contractual protections, including the use of “hell or high water” clauses, provisions allowing greater involvement by the target in the regulatory process, and larger reverse breaks to manage regulatory risk effectively.

With shareholder activism escalating, the ASX proposed reducing the cap on new security issuances by listed entities without shareholder approval from 100% to 25% by larger listed companies. If implemented, this will change deal planning and governance practice and increase execution and timing risk for scrip-heavy M&A, possibly placing ASX-listed bidders at a disadvantage. If the cap is not reduced, directors are likely to face heightened governance expectations to engage with shareholders on transformative transactions involving material dilution.

Nonetheless, we expect continued rebound in M&A volumes and values, with strong interest in gold and critical minerals, energy transition, digital infrastructure, technology, healthcare and financial services sectors. Private capital, particularly superannuation funds and private equity, will remain a key driver.

There are five core elements that govern M&A in Australia, although the target’s industry may trigger additional sector-specific laws and regulations:

• The Corporations Act governs the operation of takeovers and schemes for listed and unlisted public companies and listed management investment schemes. It is administered by the Australian Securities and Investments Commission (ASIC), an independent government body that acts as Australia’s corporate, markets, financial services and consumer credit regulator. ASIC has wide powers to investigate the conduct and security trading activities of parties in control transactions, and also publishes regulatory guides governing public M&A disclosure and conduct.
• The ASX Listing Rules create governance and disclosure rules for listed entities, including shareholder approval requirements for certain transactions. They are administered by the ASX.
• The Takeovers Panel is an independent peer review body regulating corporate control transactions in widely held Australian entities by the efficient, effective and speedy resolution of takeover disputes. Its guidance notes also govern public M&A disclosure and conduct.
• In terms of foreign investment, the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and the Foreign Acquisitions and Takeovers Regulations 2015 (Cth) (FATR) establish a foreign investment screening regime administered by FIRB and the Treasurer. FIRB must be notified before completion of certain acquisitions.
• With regard to competition/antitrust, under the Competition and Consumer Act 2010 (Cth), an entity cannot directly or indirectly acquire shares or assets if this would have the effect, or likely effect, of substantially lessening competition in any Australian market. Certain acquisitions must be notified to the ACCC before completion.

For off-market takeover bids and schemes, bidders may offer cash, scrip (securities) or both. In contrast, for an on-market takeover bid, consideration can only be cash. Cash consideration remains the most prominent form, with acquirers offering all cash consideration to target shareholders in approximately 70% of public M&A transactions in 2025.

Scrip consideration, often in the form of “stub equity”, is increasingly used in public M&A to align the interests of the bidder and target shareholders and soften valuation dislocation. This typically includes minimum and maximum scrip thresholds, scale-backs and nominee or custodial arrangements for foreign or numerous small holders.

Consideration could also be scrip of a foreign listed company, or bidders could seek a CHESS Depositary Interests (CDI) listing (either a full listing or foreign exempt listing) on the ASX and offer CDIs as an alternative (i.e. shareholders may choose either foreign scrip or CDIs).

Earn-outs are also widely used in private M&A to bridge valuation gaps and incentivise post-completion performance. Contingent value rights are more commonly used in public M&A transactions, though they remain less prevalent than in jurisdictions such as the United States.

A comprehensive Australian due diligence exercise typically spans legal, financial, tax and commercial workstreams, increasingly focusing on ESG, data, cyber and regulatory compliance, including anti-bribery, corruption and sanctions.

Australian practice strongly emphasises safeguarding sensitive, non-public information. Materials are shared under strict confidentiality undertakings, circulated on a need-to-know basis and used only for the transaction. Insider trading laws apply to holders of non-public price-sensitive information.

While pre-completion information exchange necessary for diligence and integration planning is permitted, competition law requires:

• limiting competitively sensitive exchanges;
• avoiding pre-completion coordination of competitive conduct; and
• ensuring integration steps generally occur only post-completion.

In private M&A, particularly mid-market deals and private equity exits, W&I insurance is now widely used on both sides, including in competitive sale processes, and is close to market-standard practice. Over the past few years, it has also been used in public M&A transactions, although this remains less common.

Its primary effect on negotiations is to shift recourse from the sellers to the insurance policy, with sellers typically seeking “no recourse” except in cases of fraud. Although “no recourse” for title and capacity claims is a common starting position, sellers typically shift in negotiations to standing behind them for a limited period and for amounts up to the purchase price above the W&I policy limit.

Sellers are generally agnostic to the scope of the warranties as long as they are accurate, can be verified and typically give comprehensive representations and warranties. As W&I insurance does not cover known issues, negotiations often focus on material matters identified through due diligence for which the buyer seeks specific indemnities. Time limits and caps for warranty and indemnity claims under the sale agreement usually mirror those set out in the W&I policy, so negotiations tend to centre on the time limits and monetary caps for other claims, which are primarily pre-completion conduct claims and specific indemnifies sought for known issues. These remain subject to recourse against the sellers.

Under the screening regime created by FATA and FATR, proposals are approved by the Treasurer or their delegate, advised by FIRB, which is a non-statutory body. Prior notification of an investment might be required, depending on the type of investor and investment, the nature of the underlying investment and the proposed investment’s value. 

FIRB approval is mandatory for “notifiable actions” taken by “foreign persons” above monetary thresholds and for all “notifiable actions” taken by “foreign government investors”, regardless of value. Notifiable national security actions involving a “national security business” or “national security land” must also be notified irrespective of value. The Treasurer can block proposals contrary to the national interest or national security, or impose conditions.

Public M&A disclosure and announcement requirements in Australia pivot on ASX continuous disclosure and Corporations Act requirements.

A bidder’s approach by way of a non-binding indicative offer (NBIO) generally does not have to be disclosed to the market unless it is no longer an indicative, non-binding proposal and/or has lost its confidentiality. This remains the case where the target has granted due diligence and potentially where there is a short period of early-stage exclusivity to facilitate that due diligence. However, this depends on the precise terms of any early-stage exclusivity; the Takeovers Panel is now taking a stricter approach to early-stage exclusivity arrangements than before. Of course, there is always the risk the target announces an NBIO to stimulate an auction process or in the face of existing competing bids.

Once binding agreements are signed (typically a scheme implementation agreement for a scheme or a bid implementation agreement for a friendly takeover) market announcements are required, and market practice is to release the entire agreement. Following this, updates to transaction terms or progress are announced.

For takeover bids, a bidder must lodge a bidder statement with ASIC and the target and send it to shareholders. This sets out the offer, the bidder’s intentions towards the target’s business and its funding sources. If scrip is offered, prospectus-equivalent information must be included. The target board must issue a target’s statement with its recommendation and reasons, along with other material information required for shareholders to make an informed decision. Substantial holding notices must be filed by a bidder on acquiring a relevant interest in 5% or more of target voting shares and for 1% movements.

For schemes, the target must issue to its shareholders a scheme booklet/explanatory statement with:

• information about the scheme;
• the target director’s recommendation;
• information about the bidder;
• its intentions towards the target’s business; and
• funding sources and other material disclosures.

The target must also commission and provide to shareholders an independent expert’s report which states whether, in the expert’s opinion, the scheme is in the target shareholders’ best interests.

Across all structures, parties must maintain an informed market throughout and issue timely supplementary disclosures for any material changes.

Public takeovers are primarily regulated by the Corporations Act, administered by ASIC, and supervised by the Takeovers Panel. ASX Listing Rules also apply to listed targets.

Deal protection measures

A range of deal protection measures may be agreed in implementation agreements with the target in friendly transactions to protect against competing bids, including:

• Break fees. These are permissible but generally must be capped at 1% of the equity value of the target. Common trigger events include: target directors not recommending the transaction or adversely changing their recommendation; a competing transaction that successfully completes; a material condition within the target’s control not being satisfied; and a material breach within the target’s control. Reverse break fees payable by a bidder to a target are also common and tend to match the quantum of any break fee. Common trigger events include the bidder failing to get finance or regulatory approval.
• Exclusivity/no-shop/no-talk. These, as well as no-due-diligence provisions or notification rights, are market standard, but no-talk and no-due-diligence provisions must be subject to a fiduciary out to allow the target to engage with superior proposals. Without one, the Takeovers Panel will likely consider these restrictions as creating “unacceptable circumstances”.
• Matching rights. These are also market standard and generally acceptable, but must be reasonable in duration (typically 3–5 business days) and scope (generally structured as a “last-look” right that does not unduly delay or frustrate a competing proposal).

Minority shareholder rights and obligations

• Compulsory acquisition. If, at the end of the takeover bid, the bidder has at least 90% of the bid class (and satisfies the statutory tests), it can compulsorily acquire the remainder on bid-equivalent terms via the post-bid compulsory acquisition process. Minority holders may apply to court to oppose this only if the consideration is not fair value.
• Buy-out rights. Where the bidder reaches the 90% threshold at the end of the takeover bid, remaining holders can require the bidder to buy their securities on terms aligned to the bid (for example, where the bidder decides not to utilise compulsory acquisition).
• Appraisal rights. US.-style appraisal rights in takeovers are not available, but in a compulsory acquisition a court can review to test fair value. Dissenting holders can also rely on the statutory buyout and the Takeovers Panel/courts for protective relief.

Litigation remains the most common forum for resolving M&A disputes. That said, arbitration is also frequently used, particularly if a faster, confidential and more specialist dispute resolution is sought. There is no single preferred governing law, although New South Wales and Victorian law are the most commonly adopted.

The Takeovers Panel has jurisdiction over public M&A disputes concerning control transactions on application being made by an affected party or ASIC. Its role is to keep takeover markets “efficient, competitive and informed” by resolving bid-related issues in real time and with minimal formality. Its powers are limited: it can declare “unacceptable circumstances” and make remedial orders to restore a fair market (e.g. disclosure, divestment, restraining voting or varying bid timetables), and make interim orders to preserve the status quo. It cannot award damages, impose civil penalties or adjudicate private contractual claims.

Emerging technologies are reshaping the Australian M&A landscape, presenting significant opportunities and heightened risk. On the opportunity side, deal activity continues to be driven by acquirers seeking artificial intelligence (AI), data analytics and fintech capabilities:

• to accelerate digital transformation;
• to enhance customer engagement; and
• to secure long-term competitive advantage.

These assets are viewed as critical enablers of scale, efficiency and innovation, particularly in sectors undergoing rapid digitisation.

At the same time, the rise of AI and data-driven business models has expanded the scope and intensity of due diligence. Buyers are placing greater emphasis on privacy, cybersecurity and AI governance. Australia currently regulates AI indirectly through existing laws, sector-specific rules and non-binding principles, such as the AI Ethics Principles (2019) and the draft Voluntary AI Safety Standard (2024). In September 2024, the government proposed 10 mandatory guardrails for high-risk AI systems which would impose forward-looking and preventative risk management obligations including in relation to transparency and explainability, heightening the importance of forward-looking risk assessment during due diligence.

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