Super Profits Tax Leads to Drop in Australian Takeover Rate

22 June 2010 (Last Updated June 22nd, 2010 18:30)

Mining acquisition deals in Australia are set to fall to a five-year low after the government announced plans to enforce a 40% tax on mining company profits. The number of transactions in the first quarter of 2010 plunged to 47 with a total value of $914m, compared with 89 deals worth $9.

Mining acquisition deals in Australia are set to fall to a five-year low after the government announced plans to enforce a 40% tax on mining company profits.

The number of transactions in the first quarter of 2010 plunged to 47 with a total value of $914m, compared with 89 deals worth $9.11bn a year ago, Bloomberg data reveals.

The first quarter also saw the smallest number of deals since the first quarter of 2006 and the lowest value since the fourth quarter of 2005.

The proposed tax, to be implemented in 2012, forced major mining companies to shelve more than $20bn of resource investment in Australia.

The value of mining takeovers also declined 85% from the previous quarter, the data reveals.

Peabody Energy reduced its offer for Macarthur Coal by 6.3% citing tax proposals to A$3.8bn - the offer was rejected by Macarthur.

The decline in takeovers also contributed to a drop in the value of global mergers and acquisitions, which fell to $509.1bn in the first quarter of 2010 from $532bn in the previous quarter.