*

Santos deal collapse marks largest all-cash offer

withdrawal in

Australia

*

Tech disruptions and new rules toughen Australian M&A

conditions

*

Lengthy approval processes increase risk in Australia

deals

By Scott Murdoch

SYDNEY, Sept 24 (Reuters) - Nearly $40 billion worth of

big ticket buyouts have collapsed in Australia this year - the

most in fifteen years - as regulatory risk and misaligned

valuations add to the growing challenges in navigating an

increasingly stringent regulatory environment.

An ADNOC-led consortium's decision to walk away from its

$18.7 billion bid for Santos, Australia's second

largest gas producer, is the latest in a string of high-profile

deals to collapse in Australia this year.

The ADNOC-bid, through its investment vehicle XRG, was

shelved as the parties disagreed on potential capital gains tax

liability related to a Santos asset, Reuters reported last week

citing sources.

The deal was also likely to have faced difficulty being

approved by Australia's Foreign Investment Review Board (FIRB),

analysts said. Including Santos's net debt, the bid was the

largest all-cash offer in Australian history.

Its collapse has pushed the value of failed deals to the

highest point since 2010, according to LSEG data, raising

questions about the feasibility of large-scale transactions in

Australia.

A lengthy approval process, taking into account reviews by

the Australian Competition and Consumer Commission (ACCC), FIRB

and other government agencies, is making deals down under harder

to execute, advisers said.

"Public equity markets remain at record highs, with both

debt and equity funding readily available, which should normally

be driving a strong wave of M&A activity," said Garren Cronin, a

managing director at Cadence Advisory, a boutique firm.

But he said factors including technological change creating

disruption in multiple industries and new ACCC rules effective

from Jan. 1 making regulatory pre-approval mandatory for most

deals had toughened deal making conditions.

"Regulatory overreach, particularly from the ACCC, has

created a maze of uncertainty," Cronin said. "The ACCC's

successful push for a mandatory approval process ... has added a

material burden to deal activity."

Under previous rules, companies could voluntarily seek ACCC

approval to reduce the risk of the regulator intervening and

taking enforcement action on deals it thought were anti

competitive.

'MORE STRESS, TENSION'

A spokesperson for ACCC said the new regime "seeks to strike

the right balance between seeing and preventing anti-competitive

acquisitions," while allowing those that are unlikely to raise

competition issues to proceed with certainty.

"This includes provision for low impact acquisitions to seek

a waiver that removes the obligation to notify."

Advisers, however, said that longer timelines for completing

the regulatory processes and finalising big ticket transactions

are increasing the risk for the deals.

"Time kills deals, whether it's a private M&A or public M&A,

losing momentum is definitely a trend of the current M&A

environment," said Lance Sacks, a corporate partner at Baker

McKenzie.

"There's still this valuation gap. Funding is readily

available but it's got to make sense.

"Buyers and (corporate) boards are a lot more considered, a

lot more diligent and a lot more cautious before they pull the

trigger."

Peabody Energy ( BTU ) in August pulled its $3.8 billion bid

for Anglo's Queensland coal assets, while Brookfield and

Bain walked away from $2.5 billion bids for Insignia Financial ( IOOFF )

earlier in 2025.

The Australian financial services group in July signeda $2.2

billion buyout agreement with New York based CC Capital.

KWM practice leader for M&A David Eliakim said some bidders

considering complicated deals were attempting to pre-empt future

regulatory issues that could stem from FIRB, the ACCC or tax

authorities.

"That has resulted in some harder issues being confronted

and debated before bid documents are formally signed,

creating more stress and tension than might otherwise be the

case, which in turn impacts whether transactions are executed."