Australian investors are sending a clear message to listed companies this reporting season about their disapproval of mergers and acquisitions, as stocks including Ampol, Reece and Perenti were all sold off sharply on Monday.
Plumbing and bathroom supplies company Reece fell 13 per cent at the close of trade on Monday, while Perenti was down almost 16 per cent and Ampol fell sharply in morning trade before ending the session down 2.6 per cent.
APA Group is another company which reported on Monday where shareholders have objected to its corporate activity, but, because the stock has been so severely sold off in the past year the shares actually ended up almost 8 per cent.
The group paid $1.8bn for Alinta Energy assets a year ago, raising funds at $8.50 per share and today its share price is $7.12.
On Monday, it signalled asset sales to pay for acquisitions, with sources suggesting investors would be unlikely to support any further big equity raisings to fund major deals.
The share price of APA Group is down 11 per cent in the past year and has declined more than 33 per cent in the past five years.
Meanwhile, Aristocrat Leisure shares also fell sharply last week when the company said it was searching for mergers and acquisition opportunities — DataRoom had earlier reported it was looking at US-based Interblock. It bought Neo Group for $1.8bn last year.
Market sources say Reece has disappointed after embarking on a string of M&A deals in the US which have not gone as well as hoped for.
Ampol bought Z Energy in 2021 for $NZ2bn and on Monday the fuel convenience chain across the Tasman was a drag on its overall result, with earnings before interest and tax down 12 per cent to $231.8m for 2024 with fuel volumes also lower.
Meanwhile, the market is yet to forgive Perenti for buying DDH1 for more than $300m, with its stock plunging on the day the deal was announced in 2023.
On Monday, the shares fell to $1.16, despite the group reaffirming guidance, down from about $1.25 before it purchased the business two years ago.
The ultimate negative experience has been suffered by Orora, which bought Saverglass and has since downgraded earnings, with its share price at $2.15 after raising to fund the deal at $3.52.
oOh!Media bought Adshel and is now trading at not much more than it was before the deal.
CSL’s massive grab of Vifor Pharma is yet to prove itself with the shares at $261, below the price they were trading at before it bought the business for $16.4bn in 2021.
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