Australia Faces Record $40 Billion M&A Deal Failures Amid Tough Regulations

In 2025, Australia experienced an unprecedented collapse of nearly $40 billion in major mergers and acquisitions (M&A) deals, marking the highest level of deal failures in 15 years. This surge is primarily attributed to escalating regulatory challenges and valuation mismatches between buyers and sellers.

The most significant of these failed transactions was an $18.7 billion all-cash offer by a consortium led by the Abu Dhabi National Oil Company (ADNOC) for Santos, a major Australian oil and gas producer. The deal was derailed due to disagreements over tax liabilities and anticipated rejection by the Foreign Investment Review Board (FIRB). Had it proceeded, this would have been the largest all-cash offer in Australian history.

In August 2025, Peabody Energy withdrew its $3.8 billion bid for Anglo American's Queensland coal assets. The decision was influenced by extended regulatory timelines and increased due diligence requirements, which heightened the risk of deal failure.

Earlier in 2025, both Brookfield and Bain Capital abandoned separate $2.5 billion bids to acquire Insignia Financial. The withdrawals were attributed to the complex regulatory environment and valuation discrepancies.

Australia's regulatory landscape has become increasingly stringent, particularly with the Australian Competition and Consumer Commission (ACCC) implementing mandatory pre-approval rules effective from January 1, 2025. These changes have prolonged the deal-making process and introduced additional risks. Legal and financial advisors have noted that these regulatory processes not only slow down transactions but also heighten tension and caution among buyers and boards, undermining momentum and contributing to failed agreements.

Despite robust markets and available funding, the uncertainty and complexity in regulatory approvals are deterring deals. This environment has led to a cautious approach among dealmakers, with a notable increase in the number of withdrawn transactions. In 2024, Australia experienced the highest annual tally of withdrawn transactions in 14 years, a trend that has continued into 2025.

The collapse of these major deals has broader societal implications, including potential impacts on employment, regional economic development, and investor confidence. Communities that would have benefited from these investments may face economic stagnation, and the overall perception of Australia's attractiveness as an investment destination could be affected.

While Australia has experienced failed M&A deals in the past, the scale and frequency observed in 2025 are unprecedented. This trend underscores the significant impact of regulatory frameworks on corporate strategies and market dynamics within Australia's M&A landscape.

The surge in failed M&A transactions in Australia during 2025 highlights the critical role of regulatory environments and valuation alignments in successful deal-making. As companies and investors navigate this complex landscape, understanding the interplay between regulatory requirements and market dynamics will be essential for future success.