By Alex Gluyas


A tsunami of mergers and acquisitions is expected to flood the Australian sharemarket this earnings season, as local companies look to unleash their COVID-19 war chests and execute their plans for global market dominance.

On Monday, the ASX saw $60 billion worth of deals as US payments giant Square acquired Afterpay in the biggest takeover in Australian corporate history, while Santos and Oil Search sealed a $21 billion oil and gas merger.

The share prices of all four companies leapt as a result, and the good news for investors is pundits suspect this is just the beginning.

“This earnings season we’re anticipating a continuation of M&A activity, but this time it’s going to be the hunted becoming the hunters,” said John Ayoub, portfolio manager at Wilson Asset Management.

“We expect to see boards starting to loosen the shackles and start looking globally to use their elevated equity valuations to start growing by acquisition.”

The deals boom expected to play out over the next year is being viewed as a natural part of the economic cycle as companies emerge from a period of significant transformation over the past 18 months.

Read more in the Australian Financial Review.