DealPulse 2024

Deal Pulse

Queensland M&A | Resourceful

Queensland: March 2024

Disclaimer: This publication contains general information and is not intended to be comprehensive, nor to provide financial, investment, legal, tax or other professional advice or services. This document should not be acted on, or relied on or used as a basis for any investment or other decision or action that may affect you or your business. Any such reliance is solely at the users risk. Whilst we have no reason to believe that the information in this document is not reliable and accurate, this cannot be guaranteed. Pitcher Partners, its subsidiaries or affiliates thereof are not liable for any error, omission or inaccuracy contained herein, whether negligently caused or otherwise, or for any loss or damage howsoever suffered by any person or entity due to such an error, omission or inaccuracy. Pitcher

Introduction

Pitcher Partners is pleased to present our 10th anniversary edition of Deal Pulse.

Deal Pulse “Resourceful” analyses Queensland Mergers & Acquisitions (“M&A”) over the calendar year 2023. This report presents research findings including key transactions and sector trends.

Deal Pulse focuses on Queensland M&A activity being:

• Acquisitions by Queensland based private and public corporate entities of local, interstate and offshore ventures; and

• Divestments of Queensland based ventures to local, interstate and offshore entities and also private equity funds.

Transaction values are included in the report to the extent that deal values have been publicly disclosed.

Global M&A activity dropped materially during 2023, and this trend was echoed in the Queensland market where deal volumes were down 16% to 250 (2022: 296 deals). Aggregated disclosed deal values however increased to $20.9bn (up 18% on 2022’s $17.6bn), led by two mega deals in resources being Whitehaven’s acquisition of BMA’s assets, and Allkem’s merger with Livent Corporation.

Deal volumes during 2023 were supported by overall strength in Energy, Mining and Utilities (EM&U) which increased by 21% to 29 deals. Transactions in coal dominated with Sev.en Global taking a controlling stake in Coronado, Stanmore taking control of MetRes, together with the sales of Ensham and New Oakleigh mines.

Whilst many sectors slowed consistent with the overall deal decline, interesting trends were noted within certain subsectors. Specific industry opportunities and decisions by deal makers saw:

• Business services: decreased in its training deals but was supported by continued childcare activity.

• Consumer: showed lower activity across automotive related sectors, but strong demand for food and beverage deals, and increases within the veterinary services space.

• Financial services: have strong volumes of insurance broking and funds management deals, and see the large merger of Australian Retirement Trust and Comm Super.

250 deals announced 16% on 2022 (296 deals)

disclosed deal value

Largest deal: BMA's sale of QLD metallurgical coal assets to Whitehaven $6.5bn

Most active: Technology, media and telecoms

39 Deals

2014–2023 Number of deals & total deal values

Below $250m $250m+ Total

Other notable insights:

• Interstate & international buyers: a decline in national interest for Qld businesses (124 deals in 2022 down to 69 deals in 2023) contributed to the lower deal volume. Conversely international deals increased to 41, from 2022’s 33 deals.

• PE buyers: interest dropped to 11 deals in 2023 (from 13 deals in 2022), with Fortitude Investments active with 3 acquisitions.

• IPOs: consistent with global and national levels, activity in equity capital markets continued their downward trend, with only 3 Queensland companies listing on the ASX. It is fair to say, an open IPO window would certainly be welcomed by dealmakers.

Whilst 2024 marks the 10th edition of Deal Pulse, it is also the 50th anniversary of Pitcher Partners Queensland. We are extremely proud of our half century of supporting our clients and their dealmaking, and will continue to do so for many years to come.

We trust you find this report valuable.

Warwick Face Partner In Charge – Corporate Finance

e. wface@pitcherpartners.com.au

A decade of changing sector deal rankings

Whilst the overall market is impacted by wider macro factors, key sectors run to their own cycles. A decade of Deal Pulse has highlighted changes in sector deal rankings. The top three sectors each year and key themes were:

246

258

284

303

324

“Down but not out”

303 Deals Technology, media & telecoms

Leisure Energy, mining & utilities

COVID stops the market in Q4, TMT remains solid with a GBST bidding war, and EML acquisition spree.

“Roller coaster”

263 Deals Technology, media & telecoms Energy, mining & utilities Pharma, medical & biotech

Market in an up, down, up roller coaster, with TMT driven by software deals. Strong EM&U growth with 14 gold deals.

“Don’t stop me now”

337 Deals Technology, media & telecoms

Consumer Energy, mining & utilities

Highest deal volumes on record, TMT deals. OverTheWire acquired by Aussiebroadband, and software deals in GlobalX and ENData.

“Building tomorrow”

296 Deals Technology, media & telecoms

Consumer Pharma, medical & biotech

Software dominates again. Fathom, Retail Express & Vision6 all divested. Notable growth in Construction deals as Qld was building for tomorrow.

“Resourceful”

250 Deals Technology, media & telecoms

Consumer Energy, mining & utilities

TMT leads again, meanwhile Coal deals surge with control changing in Coronado and Ensham divested.

Sectors summary

Sectors trending up

Agriculture

Energy, mining & utilities is seeing a resurgence after a couple of years of declining deal numbers. It was all about coal. Whitehaven acquired metallurgical coal assets from BHP and Mitsubishi in a deal valued at $6.5bn (the largest deal in 2023). Meanwhile New Hope and Stanmore divested certain assets during the year. With the QLD government's target of 50% renewables by 2030, and their plan to showcase to the world our clean energy credentials during the 2032 Olympics, energy deals within the EM&U sector are expected to strengthen further.

2023 didn't see too many sectors with growth numbers however it was pleasing to see Agriculture climbing in deal volume over the year. Up 3 deals on the previous year, Agriculture in Qld saw 10 deals transact in 2023.

In one of the largest deals in this space in 2023, Gina Rinehart's Kidman & Co sold their 2.4m ha Brunchilly Cattle Station near Middlemount for an estimated $200m.

While the deals within Real estate only increased from 6 deals in 2022 to 7 deals in 2023, the aggregate disclosed deal value increased from $40m in 2022 to $773m in 2023. This increase was largely attributed to the $500m acquisition of Student One accommodation by NYSE listed Blackstone and was the sector's largest deal.

Figure 1: M&A deal volume 2014–2023

Sectors strong and steady

Financial services have remained steady for another year with QIC's acquisition of Renewa LLC, the largest disclosed deal at $687m

ASX listed Steadfast Group Limited (ASX:SDF) acquired Sure Insurance for a disclosed $280m in the Insurance subsector.

Construction continued its upward trend during 2023. The acquisition of Onsite Rental Group by Sime Darby was the sector's largest deal at $635m. Consulting and other construction support services also transacted well in 2023 showing further evidence of businesses wanting to strengthen and expand their current service offerings.

Leisure saw 20 deals transact in 2023, steady on the 22 deals in 2022.

Flight Centre is continuing its recovery post COVID with their acquisitions of luxury travel agencies Luxperience Enterprises and Scott Dunn.

Figure 2: M&A deal volume 2014–2023

Sectors trending down

Whilst again the leading sector with 39 transactions, TMT trended down for the second year in a row.

AI, cyber security and IT consulting/service enhancements were the trending acquisition strategies.

Deal activity in Pharma, medical & biotech fell in 2023 after remaining steady in recent years, however the value of the deals has more than doubled on the previous years' values.

Healthia was the most active company, acquiring 2 optometry businesses and Melbourne Hand Rehab before being acquired by Pacific Equity Partners in the sector's largest deal, changing hands for over $541m.

Deals in the Consumer sector have again declined after their rollercoaster peaks in 2017 and again in 2021, and after a solid result last year.

Automotive has remained strong in the sector with Automotive Retailers and Automotive Parts subsectors transacting 6 deals for the 2023 year.

Eagers Automotive furthered its stronghold with dealership acquisitions across Melbourne and Northern Queensland.

Figure 3: M&A deal volume 2014–2023

1

Technology, media & telecoms Open for consultation

Whilst the deals continued for Qld's innovative software businesses, demand for AI and cyber skills has seen IT consultancy transactions grow markedly during 2023.

IT Consultancy transactions seeking enhanced capability in order to widen service offerings and market access saw:

• ASX listed SOCO acquire Canberra based AxSym Technology for $10.7m, to give a federal government focus to its already impressive market offering.

• VinZero was acquired by French owned Arkance, for an undisclosed sum, allowing it to become one of the largest Autodesk partners globally.

• ASX listed Peppermint Innovation acquired assets from XPON Technologies, and will be renamed Peppermint Intelligence (PINT), to highlight its AI expertise.

• Cloud consulting company Itoc was acquired by US-listed technology consultants Thoughtworks for $26m.

• Victorian managed-service provider Tesserent acquired Beyond Binary, a cyber attack simulation company, for $7m.

2022

52

2023

39

Software transactions included:

• US Accel-KKR backed Humanforce taking private integrated HR ecosystem intelliHR for a total consideration of $88m after a bidding war with UK based software business The Access Group.

• ASX listed COSOL acquiring asset management and maintenance software providers OnPlan Technologies and AssetOn for $29m.

• Pitchers' client FireMate being acquired by Accel-KKR backed Uptick.

• Mining tech company ivolve being acquired by an Australian subsidiary of Japanese Komatsu.

• TEN13 Management exited its early stage investment in business event management company Arinex after it was acquired by Joyn and rebranded Arinex Live.

• Pitchers' client Go1's acquisition of German based Blinkist, a book summarising subscription services, and Anders Pink.

• Fintech applications software company WealthConnect was acquired by Anchorage Capital backed GBST

• ASX listed Gathid divested its Rightcrowd Software business to Bloom RC Holdings in a $14m deal.

Outside software, Toowoomba based Maxo Telecommunications acquired Fonebox contact centre assets and Zintel NZ operations from Aussie Broadband for $7m.

“SOCO and AxSym coming together strengthens our position in Canberra, dramatically increases our local footprint and opens additional opportunities to service our growing book of Federal Government clients. Furthermore, AxSym’s success with the NSW Government will serve as an accelerator to SOCO’s existing expansion into the southern states.”

SIMON FORTH, CHIEF EXECUTIVE OFFICER, SOCO (WWW.SOCO.COM.AU)

Consumer Hungry for more!

Whilst transactions in the automotive subsector continued, food and beverage transactions, including restaurants, liquor and packaged food underpinned Consumer deals in during 2023.

Demand for food and beverage deals saw:

• Collins Foods continuing its KFC acquisition strategy buying 8 locations in the Netherlands. They also sold Sizzler Asia to MFG.

• Retail Food Group acquire Beefy's Pies in a $10m deal.

• Fortitude Investment Partners got a $32m payday for its sale of Emu Hotel to Charter Hall.

• Burleigh’s popular Paddock Bakery acquired by the owners of its close neighbour, Justin Lane Pizzeria, for an undisclosed sum.

• Frosty Boy (a dessert, beverages and food products processor) being sold to US based Kent Corp after a 7-year hold by Advent PE.

Automotive related transactions included:

• The $271m sale of Autopact by Archer Capital to Tokyo-listed Optimus Group.

• Eagers Automotive continuing their M&A strategy picking up a portfolio of dealerships and properties in Melbourne for $241m.

• The sale of 4WD accessories manufacturer TRED Outdoor by Venlo to US listed Clarus Corporation.

• Cooldrive acquiring Turbo Master, a supplier of turbo chargers for 4WDs, trucks, earthmoving and industrial applications.

Other notable transactions include:

• Pitcher's client Lindsay Australia acquiring rural retailer WB Hunter for $34m.

• Michael Hill snapping up Victorian based familyowned Bevilles Jewellers for $46m.

• S. Kidman acquiring Drizabone.

• Loving Tan being invested in by US Private Equity firm Gauge Capital.

• Pitcher's advised Union Institute of Languages , an English course provider for primary, secondary and tertiary educators, inks its acquisition by the University of Southern Queensland for $9m.

2023

“WB Hunter has a longstanding and highly successful operating history, serving as an integral member of Australia’s rural supplies market. The acquisition expands Lindsay’s presence in key growth markets of Victoria and NSW and provides a strong platform for pursuing further growth opportunities across these regions”

CRAIG BARKER, ACTING CEO, LINDSAY (ASX RELEASE, 3 JULY 2023)

Energy, mining & utilities

Coal, coal, coal

EM&U saw a wide variety of deals across various mineral classes including gold, lithium and copper. 2023 however, was the year of the coal deal in Queensland with a numbers of strategic assets changing hands.

Coal assets with 7 deals drove EM&U during 2023, including:

• BHP and Mitsubishi Development’s arm operates very strongly in Queensland. It divested $6.5bn worth of Met. Coal assets to Whitehaven Coal . This was the largest Queensland deal during 2023.

• New Hope's sale of mining assets relating to the New Oakleigh Mine

• Pitchers’ client Sev.en Global Investments acquired a 51% stake in ASX-listed Met. Coal producer Coronado Global Resources for an implied $1.4bn.

• Idemitsu Australia sold its 85% interest in Ensham Coal Mine to South African listed coal miner Thungela Resources for $340m.

• Stanmore took over M Resources' 50% stake in the MetRes joint-venture, acquiring both the Mavis Downs and Milennium mines. As part of the transaction, Stanmore has agreed to grant the seller a royalty on future product sold.

• NYSE-listed Peabody Energy Corporation acquired a part of Stanmore's Wards Well tenement in a $136m deal. Peabody and Stanmore have previously dealt on the $20m Red Mountain jointventure in 2017.

Within the mining services subsectors deals included:

• M Resources taking a control stake in Pitchers’ client Metarock Group at an implied value $115m.

• MacKellar Mining divesting to North American Construction Group for $442m.

Gold was the second most active subsector, with 5 deals including:

• Goldminer and Pitcher’s client Chesser Resources was acquired, and taken private, by Canadian American listed gold and silver miner Fortuna Silver Mines for $71m.

• Sunshine Metals (ASX:SHN) purchased the Greater Liontown project near Charters Towers which comprises predominantly Gold as well as Zinc and Copper.

• Canadian listed company Novo Resources acquired the Malmsbury gold project from GBM Resources

*Deals above $500m excluded

“We are excited to become the majority shareholder of Coronado. The company is a global leader in metallurgical-coal mining, with worldclass performance across its mines.”

ALAN SVOBODA, CEO, SEV.EN GLOBAL INVESTMENTS (WWW.MININGWEEKLY.COM.AU)

Pharma, medical & biotech

Healthy deals afoot!

Whilst well down on 2022, Pharma, medical and biotech deals saw deals across a wide variety of subsectors ranging from health services, equipment/technology, biotechnology, and also aged care.

Health service deals were many and varied:

• The rise of telehealth post pandemic has soared. Pitcher's advised Doctors on Demand sold to Vitura for $25m with the deal completing late 2023.

• Pitcher's advised Humanity Health, a leading provider of psychology services in its merger with Parc Capital backed Kinela.

• Pacific Equity Partners privatised ASX listed allied healthcare provider Healthia for a total consideration of $541m.

Notwithstanding this, Healthia’s acquisitions continued with another 3 deals including a focus on optometry:

– Visions Eye Health;

– Melbourne Hand Rehab; and – Kosmac & Clemens Optometrists

• Medical Imaging transactions included:

– Carlisle Health's acquisition of Exact Radiology ; and

– Pitchers’ client Mediquip’s acquisition of Medical Plus (ANZ)

• Rehabilitation hospital deals included:

– Southport Private being sold to Dexus; and

– RAM’s acquisition of Eden Private Hospital

• NDIS related deals included:

– NIB's acquisition of Connect Plan; and – Southern Cross Support's sale to private equity.

On the medical equipment front, deals included:

• ALS acquiring Indian based Indtech Instruments.

• Crystalaid's acquisition of nasal obstructor Oventus

• Aim Lab's divestment to US backed Brooks Automation.

Other transactions included:

• ASX listed, and Pitcher’s client, Microba Life Sciences , acquiring UK-based biotech Invivo Clinical for $21m.

• ASX listed Vita Group, an owner and operator of aesthetic clinics, was acquired by Practice Management, an affiliate of Sonic Healthcare, for $35m.

Aged care deals included:

• CPSM being acquired by listed Regis Healthcare for $74m.

• RSL Care’s acquisition of McKenzie.

• Fortitude Investment Partners' investment in Aged Care Decisions.

2023

23

“For us, Doctors on Demand ticked every box in terms of the business model, the tech stack, human capital, road they’ve travelled in evolving their business, and the support from major shareholders who are significant players in Australian healthcare”

(MEDICALREPUBLIC.COM.AU)

Construction

After being the sector with the highest growth during 2022, Construction again increased volumes despite overall deal market reductions. The construction sector also appears to be building capability and service offerings through acquisitions.

Some very large deals transacted in 2023 along with expansion in expertise. Including:

• Sime Darby acquired Onsite Rental Group, an equipment rental company, for $635m at 5.2x EV/EBITDA.

• Austek Asphalt , a road and pavement repair company, was acquired by listed entity MAAS Group for $45m. The acquisition will expand the service coverage of MAAS and allow it to vertically integrate with its construction materials business.

• MI Scaffold was acquired by listed Acrow for $36.3m. MI Scaffold provides industrial rigging and scaffolding solutions for marine operations, mining and civil construction.

• Systra strengthened its expertise in tunnels with the acquisition of Bamser, an infrastructure advisory and engineering firm, for $17m.

• EDG Consulting , a provider of engineering and consulting services, was acquired by Spanish engineering firm Técnica y Proyectos S.A.

5 2023 Deals 23 Value $742m (from 7 deals) Avg. Value* $18m *Deals above $500m excluded

• Listed construction and engineering firm Saunders International acquired Automation IT, a specialist automation and control systems engineering business, for $6m.

• French engineering multinational Egis SA entered into an agreement to purchase Omada Rail Systems for an undisclosed amount. Omada provides engineering and management services to railway systems.

• ASX listed Downer EDI strengthened their portfolio with their acquisition of Concrete Pavement Recycling

“Sime Darby is a natural fit for Onsite, and we are thrilled to be joining forces to build on our great success in the Australian market. With this backing, Onsite can invest into adjacencies, achieve supply chain efficiencies, expand into new markets and enhance our offering to accelerate growth and contract wins.”

MIKE FOUREUR, CHIEF EXECUTIVE OFFICER, ONSITE (SIME DARBY PRESS RELEASE, MARCH 2023)

Financial services

Going for broke

Financial servies historically has not been a key sector of the Qld market. Whilst 2023 saw the number of deals contract slightly, reductions across the broader market saw it move into the top 6 sectors. The insurance sub sector was the main driver with 38% of the sector’s transactions.

Insurance broking / underwriting transactions included:

• Sure Insurance’s $280m divestment to Steadfast.

• BMS Group acquiring:

– Coast to Coast ; and

– Blue Book for $15m.

• Insuret , a well-established specialist underwriting agency in rental car fleet insurance and the emerging “mobility fleet market”, divesting to Envest Group

Other transactions included:

• Australian Retirement Trust, one of Australia’s largest super funds, successfully merging with the $12.3b Commonwealth Bank Group Super (Group Super) plan.

• Brisbane-headquartered fintech WLTH increasing its loan book to more than $1.5bn following the acquisition of Gold Coast-based Mortgage Mart of Australia

• Infocus Wealth Management took a significant equity position in Wealth Connexion which in turn, acquired a number of retail practices formerly held by Infocus.

• Quick loans business Nimble entered the education sector, acquiring smaller player ZeeFi, which lends to students not eligible for government funding.

In the funds management subsector notable deals included:

• QIC acquiring US based Renewa LLC, a leading land and infrastructure investor in the renewable energy industry for $687m.

• Millennium3 Financial Services selling out to ASX listed WT Financial Group Limited.

• Tactical Global Management’s merger with Alpha Vista Investment Managers.

“At Australian Retirement Trust, our vision is to be Australia’s most chosen and trusted retirement partner, and our recent mergers signal the confidence from corporate Australia in what we offer.”

DAVE WOODALL, CHIEF COMMERCIAL OFFICER, ART (AUSTRALIAN RETIREMENT TRUST PRESS RELEASE, NOV 2023)

Queensland businesses staying in Queensland.

Geographic spread

Sell side transactions

Queensland businesses are staying in Queenslander's hands with a jump in the number of deals being transacted between Queensland owned operations in 2023 (up from 45 in 2022 to 47 in 2023). There was a significant drop in interstate buyers from 124 deals in 2022 to only 69 deals transacting to interstate ownership in 2023.

Private Equity interest in Queensland businesses was in line with the long term average of 11.

47

Deals involved both the buyer and seller being Queensland companies.

69

Deals where the seller was from Queensland and the buyer was from another Australian state.

41

Deals where the seller was from Queensland and there was an international buyer.

11

Deals where the seller was from Queensland and the buyer was a private equity fund.

Geographic transactions (net)

Overall, Queensland’s net seller position sits at 36 more Queensland businesses being sold than acquired in the 2023 calendar year (2022: 90 more). This is at historic lows due to lower activity from interstate buyers, reflecting broader uncertainty in the Australian M&A market.

Buy side transactions

Queenslanders invested in 56 interstate owned businesses in 2023, showing another slight increase on the previous years numbers. Interest in international deals dipped slightly, down to 26 deals in 2023 compared with the 28 deals transacted the previous year.

47

Deals involved both the buyer and seller being Queensland companies.

56

Deals where the buyer was from Queensland and the seller was from another Australian state.

Deals where the buyer was from Queensland and there was an international seller.

IPO update

Consistent with global and national trends, Queensland's IPO market went back into a downward trend after 3 years of seemingly heading back towards more positive historic volumes. The 3 offerings during the year were only 1 IPO ahead of the lowest volumes over the last 21 years ( 2 in 2012 and 2019).

Pitcher Partners, for the second year in a row, were investigating Accountants on the largest IPO of the year, Tolu Mineral (ASX:TOK) which listed in August. The balance of the IPOs were:

• Great Divide (ASX:GDM) was the first to list in May 2023

• LTR Pharma (ASX:LTP) listed in late 2023

IPOs over the last 5 years have been lower than the first 5 years of Deal Pulse.

Pitcher Partners have been tracking QLD IPO activity over the last 20 years (since 2003) noting the last 5 years have been below the long term average of 9 IPOs.

About Pitcher Partners 2024

145+ partners

1,500+ people

6 independent member firms

Pitcher Partners has the resources and depth of expertise of a major firm, but with a boutique firm feel. We give our clients the highest level of personal service and attention. That’s the difference.

Pitcher Partners is an association of accounting and business advisory firms located in Adelaide, Brisbane, Melbourne, Newcastle, Perth and Sydney. We have a strong reputation for providing personal service and quality commercial advice to our clients across a broad range of industries.

We specialise in working with middle market businesses in Australia, including privately owned, foreign controlled, government owned and not-for-profits. Our clients require high technical standards, matched with a personal understanding and involvement in their affairs.

Each Pitcher Partners firm is also an independent member of Baker Tilly International, one of the world’s leading networks of independently owned and managed accountancy and business advisory firms. Our strong relationship with other Baker Tilly International member firms has allowed us to open many doors across borders for our clients.

Our commercial services to businesses

Financial essentials

Accounting and Business Advisory Services

Audit, Risk Management and Assurance

Internal Audit

Recovery, Turnarounds and Insolvency

Tax advice and Compliance

Planning and growth

Business Consulting and Commercial Advice

Business Performance Improvement

Business Structuring

Corporate Finance

Corporate Governance

Digital and Data Services

International Business Advisory

Investment Advisory Services

Succession Planning

Superannuation Services

Tax Advisory

Valuations

Private wealth services

Estate Planning

Family Office Management

Investment Advisory Services

Philanthropy Services

Succession Planning

Superannuation Strategies

Tax Advice and Compliance Industry specialisations

Agriculture

Food and beverage

Government and the public sector

Health and aged care

Hospitality

Manufacturing

Not-for-profit

Professional services

Property and construction

Retail