March 16, 2020 / 9:08 AM / 16 days ago

Market volatility puts pressure on prices in Australian M&A deals - sources

SYDNEY/HONG KONG, March 16 (Reuters) - At least three Australian takeovers potentially worth a combined $1.2 billion are facing lower prices and contract conditions, three sources said, as financial market turmoil sparked by the coronavirus has made it difficult for advisers and bidders to put price tags on deals.

The rethinking on price comes as dealmakers had hoped Australia's relatively low number of coronavirus cases would leave it as a dealmaking sweetspot, while so many other Asia-Pacific economies, including China, the region's biggest driver of takeovers, were hit hard by the virus.

But stocks in Sydney have suffered as much as others. On Monday, the benchmark ASX 200 sunk 9.7%, its biggest one-day fall since 1987.

Some bidders for Australian and New Zealand Banking Group's car lender UDC Finance and AMP's New Zealand wealth management business are lowering their offers and adding conditions due to the COVID-19 market chaos, two sources with knowledge of the deals said.

Australia's fourth largest bank and AMP, the country's biggest wealth manager, are in the middle of sale processes that once valued ANZ's equipment finance business at about NZ$660 million ($477.8 million) and AMP's NZ unit between NZ$300-to-NZ$500 million.

Binding offers for the ANZ and AMP assets were due by Monday, one of the sources said. Both processes were ongoing according to two people involved, who declined to comment on bid deadlines.

"People are being very cautious," one of the sources said.

An A$780 million ($481.65 million) private equity battle for control of Village Roadshow, the owner of MovieWorld and SeaWorld theme parks and a cinema chain operator, is also expected to see lower pricing after its shares fell 47% in the past three trading sessions to A$1.84, two sources said.

BGH Capital had offered A$4 a share for the company in January, which trumped an earlier bid by Pacific Equity Partners (PEP) on Dec 19 of A$3.90.

"A lot of parties would be looking closely at their material adverse changes clauses in the contracts right now to see if they are able to pull the pin if things do not line up," a Sydney-based M&A lawyer said.

Material adverse change clauses help buyer and seller to protect themselves against changes between bidding and a deal closing using mechanisms such as adjusting the price or potentially allowing one side to walk away.

The sources declined to be identified because they were not allowed to speak to media on the deals.

AMP, Village Roadshow, PEP, and BGH spokespeople all declined to comment. ANZ did not return a request for comment.

$1 = 1.6458 New Zealand dollars $1 = 1.6207 Australian dollars $1 = 1.6543 New Zealand dollars $1 = 1.6194 Australian dollars Reporting by Paulina Duran in Sydney and Scott Murdoch in Hong Kong; Editing by Jennifer Hughes and Jane Merriman

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