Merger volumes surge, led by bid for David Jones

This week has been a good one for M&A bankers at Gresham, Macquarie and Rothschild who have been predicting a resurgence in takeover activity.

Predictions of a resurgent Australian merger and acquisitions market by M&A bankers and lawyers may now be on firmer ground.

Deal volume to date this year, US$26.6 billion, is more than twice the same period last year when $US11.4bn of pending and completed M&A transactions had been announced, according to Bloomberg data.

This week has been especially good for M&A as well as the bankers at Gresham, Macquarie and Rothschild.

On Monday, Wesfarmers announced it had agreed to sell its insurance broking and premium funding operations of its insurance division to Arthur J. Gallagher & Co for $1.01bn.

Gresham and Macquarie advised Wesfarmers and are also David Jones’ investment bankers. The department store operator today accepted a $2.1bn takeover offer from South Africa’s Woolworths, which was advised by Rothschild and South Africa’s Standard Bank.

Woolworths says it is their biggest ever takeover deal, and it is the third-largest retail M&A deal globally this year according to Dealogic.

“We’re very happy with the advice they’ve given us,” Woolworths chief executive Ian Moir, referring to Rothschild, told Data Room in an interview. “They’re bright, they’re sharp.”

Rothschild in South Africa has formed a close relationship with Mr Moir and together with Standard Bank, Citigroup and J.P. Morgan, has secured debt financing for the acquisition.

“They (Rothschild) can speak across different markets and products such as forex and debt because of their international team,” says Mr Moir.

Rothschild’s New York, London, Johannesburg, Melbourne and Sydney bankers were all pulled into working on the David Jones deal.

Mr Moir held a news conference today in Rothschild’s offices overlooking Sydney’s Opera House and Harbour Bridge. In attendance was Gareth Cope, one of three co-heads of Rothschild’s Australian business, who believes Rothschild's unconflicted advisory model gives it a comparative advantage over the integrated investment banks offering advice.

(Reporting by Brett.Cole@businessspectator.com.au

Editing by Victoria.Thieberger@businessspectator.com.au

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