Nothing beats an Aussie summer – cricket, tennis and now, big M&A deals. With momentum already building in 2025, it seems Australia’s M&A market is showing no sign of slowing for the summer holidays.

Five days into the new year, BlueScope revealed a AUD 30/share takeover proposal from ASX-listed SGH and NASDAQ-listed Steel Dynamics, which would value the Australian steelmaker at more than AUD 13bn (USD 8.9bn). Four days later, Rio Tinto confirmed it was in preliminary talks with Glencore about a possible combination, which, if successful, would create the world’s largest mining company outpacing the AUD 236bn (USD 160bn)-market cap rival BHP.

While it is not certain these potential deals will eventuate – BlueScope rejected the consortium’s proposal on 7 January and Rio Tinto has until 5 February to confirm its intention – the consensus expectation is that the strong momentum will continue in 2026. This is driven by “the sustained stabilisation of macroeconomic KPIs allowing better pricing of business plans and the AI investment spree accelerating transformational M&A”, according to Kate Stone, Bank of America’s head of M&A for Australia.

Last year is already standing out on its own and particularly in 2H25, as Stone points out, global M&A volumes were broadly equivalent to the 2021 peak on a run-rate basis. In Australia, both deal volume and deal count in 2025 surged 9% from the previous year and reached the highest level post 2021, with USD 93.5bn across 1,135 deals, according to Mergermarket data.

Looking into the new year, Stone says her clients, with strong valuations and balance sheets, are “contemplating bolder transactions to expand into the next logical adjacency or establish a foothold in a new market – all with the aim of enhancing the breath of their platforms”.

“We also expect the sustained flow of asset monetisation initiatives from the larger digital infrastructure businesses, regional conglomerates and integrated businesses looking to optimise the value of their portfolios through spin-offs, carve-outs and JVs.”

Sector highlights: mining vs tech

Mining reclaimed the top place in the sectoral chart with deal volume worth USD 15.4bn in 2025, after being pushed out to the second place in 2024 largely due to Blackstone’s USD 16bn swoop for data-centre business AirTrunk.

Of the 122 mining deals, the largest ones include Mitsui & Co’s USD 5.3bn acquisition of a 40% interest in the Rhodes Ridge iron ore project and South African gold miner Gold Fields’ USD 2.7bn acquisition of ASX-listed Gold Road Resources.

Technology, on the other hand, was the busiest sector with 217 deals in 2025. These include the USD 1.6bn acquisition of online realestate marketplace Domain by US-based CoStar, the USD 786m acquisition of mining software company Micromine by UK’s Weir Group, Caterpillar’s USD 736m acquisition of RPM Global, as well as Accenture’s USD 652m acquisition of cyber security firm CyberCX.

Although it’s hard to see the tech sector in Australia to overtake resources in deal volume in the short term, Bank of America’s co-head of TMT for Asia Pacific Chris Gronow says he expects to see sustained M&A activity in two main subsectors – software and digital infrastructure.

Australian software companies such as Wisetech and Xero continue to grow by investing offshore to enhance their platforms, while offshore acquirers, both financial and strategic, are seeking “home-grown Australia capabilities that they can leverage and export on a global basis,” like Micromine and RPMGlobal, he says. On the digital infrastructure front, domestic and global investors will evolve their investment strategies to the broader compute and AI-value chain ecosystem, which will lead to “investments in the services and technologies that support and enable their hard assets”, according to Gronow.

The full scale of deal activity potential in new technologies is not quite known, although the last 12 months has seen “the emergence of deep-tech companies leveraging AI focused on space and robotics and fast growing regional large-sale neocloud leaders”, Gronow continues. “If you use the US as a leading indicator where AI-related M&A expanded over 250% in 2025 (vs 2024), there may be a sustained period of elevated activity.”

However, “increased geopolitical tensions or an acceleration in the perception of an ‘AI bubble’ could disrupt the expected positive TMT M&A environment,” says Stone.

Inbound surges, sponsor back to buyout

In contrast to a 13% decline in domestic deal volume, Australia’s inbound deal volume surged nearly 47% YoY to USD 45.8bn, with 445 deals reaching the highest number of deals since 2020.

Foreign buyers feature heavily in Australia’s top deals, such as Singapore’s SembCorp in the Alinta deal, Canada’s Brookfield in the National Storage deal, as well as previously mentioned Mitsui & Co and Gold Fields.

Another significant feature is the comeback of sponsors in buyout deals – Australia recorded an increase in both buyout volume and count in 2025 with USD 30.5bn across 95 deals, up 28% and 32% respectively from 2024. Sponsor exit volume, however, went down by more than half to USD 10.8bn, despite exit numbers rising to 50 deals, with the decline largely reflecting the absence of deals similar to the 2024 outlier AirTrunk exit by Macquarie Asset Management.

According to Nicholas Tonkes, head of private capital for Asia Pacific at Oliver Wyman, the recent fundraising growth amongst those larger private capital investors has acted as a catalyst for larger sponsor buyout transactions, “pursued in cases whereby larger transaction opportunities align with established investment theses already in place”.

Private capital investor appetite is strong in areas such as transport and logistics, energy assets, digital assets and services, as well as business and financial services, says Tonkes. On the exit side, he notes that there is active consideration of IPO listing of their portfolio assets by private capital sponsors, given the ongoing positive conditions in equity markets.