Emanuel Datt
Australian companies agreed to more than A$14 billion in takeover proposals in a single day last week. Cleanaway accepted a $9.4 billion offer from Sweden’s EQT, Reliance Worldwide backed a bid from Brookfield and Japan’s Dai-ichi Life offered $11.80 a share for Challenger.
The deals are part of a broader trend. At least 10 ASX listed companies have received approaches from offshore acquirers this year, including Steadfast, Perpetual, Ingenia Communities, IDP Education, BlueScope, oOh!media and Australian Strategic Materials. LSEG data shows foreign takeovers of ASX-listed companies rose more than 200 per cent in the first nine months of 2026, to approximately US$84 billion.
“This trend is changing investor behaviour as takeover activity is a useful signal for investors. Buyers spend months on due diligence before making an offer, then pay a premium for control. When several buyers converge on the same market, it reflects a considered view of what those companies are worth. This year, premiums have ranged from 18 per cent for Challenger to 56 per cent for IDP Education,” says Emanuel Datt, chief investment officer, Datt Capital.
“These bids arrive in a market with a strong long term record,” Datt says. “Research by Dimson, Marsh and Staunton, now published by UBS, ranks Australia first for real returns in US dollar terms from 1900 to 2022, at 6.4 per cent a year, and second in local currency terms, at 6.7 per cent. AMP estimates Australian shares have returned 11.6 per cent a year since 1900, including dividends, compared with 10.1 per cent for US shares.”
The past 17 years have been more difficult. Since October 2009, Australian shares have returned 8.5 per cent a year, compared with 12.9 per cent for global shares in Australian dollar terms. The 2026 Vanguard Index Chart shows a similar gap: over the past decade, Australian shares returned 9.5 per cent a year, while US shares returned 16.3 per cent.
History suggests these cycles do not persist. Australia led in the 1960s, lagged through the 1970s and 1980s and led again during the resources boom of the 2000s. Extended periods of weak relative performance have often been followed by years of recovery.
“Some argue the ASX 200 is expensive, with a price-to-earnings ratio of about 20 compared with a long-term average of 15. But foreign acquirers are not buying the index. They are targeting small and mid sized companies with valuable assets, which is where valuations are lowest,” Datt says.
“This is consistent with the view we have held for some months. Smaller companies are trading at their widest discount to large caps in at least 20 years – about 14 times earnings, compared with 17 to 18 times for the largest stocks. Similar discounts in 2009, 2012 and 2020 closed over the following three to five years. With the Australian dollar around 70 US cents, offshore buyers also have a currency advantage.
“A takeover locks in value for shareholders who own the stock before the bid. Our portfolios focus on companies with valuable assets, sound balance sheets and genuine cash flow, and these qualities keep them attractive to future buyers,” he adds.