SYDNEY - Nearly $40-billion worth of big ticket buyouts have collapsed in Australia this year - the most in fifteen years - as regulatory risk and misaligned valuations add to the growing challenges in navigating an increasingly stringent regulatory environment.

An ADNOC-led consortium's decision to walk away from its $18.7-billion bid for Santos, Australia's second largest gas producer, is the latest in a string of high-profile deals to collapse in Australia this year.

The ADNOC-bid, through its investment vehicle XRG, was shelved as the parties disagreed on potential capital gains tax liability related to a Santos asset, Reuters reported last week citing sources.

The deal was also likely to have faced difficulty being approved by Australia's Foreign Investment Review Board (FIRB), analysts said. Including Santos's net debt, the bid was the largest all-cash offer in Australian history.

Its collapse has pushed the value of failed deals to the highest point since 2010, according to LSEG data, raising questions about the feasibility of large-scale transactions in Australia.

A lengthy approval process, taking into account reviews by the Australian Competition and Consumer Commission (ACCC), FIRB and other government agencies, is making deals down under harder to execute, advisers said.

"Public equity markets remain at record highs, with both debt and equity funding readily available, which should normally be driving a strong wave of M&A activity," said Garren Cronin, a managing director at Cadence Advisory, a boutique firm.

But he said factors including technological change creating disruption in multiple industries and new ACCC rules effective from Jan. 1 making regulatory pre-approval mandatory for most deals had toughened deal making conditions.

"Regulatory overreach, particularly from the ACCC, has created a maze of uncertainty," Cronin said. "The ACCC's successful push for a mandatory approval process ... has added a material burden to deal activity."

Under previous rules, companies could voluntarily seek ACCC approval to reduce the risk of the regulator intervening and taking enforcement action on deals it thought were anti competitive.

'MORE STRESS, TENSION'

A spokesperson for ACCC said the new regime "seeks to strike the right balance between seeing and preventing anti-competitive acquisitions," while allowing those that are unlikely to raise competition issues to proceed with certainty.

"This includes provision for low impact acquisitions to seek a waiver that removes the obligation to notify."

Advisers, however, said that longer timelines for completing the regulatory processes and finalising big ticket transactions are increasing the risk for the deals.

"Time kills deals, whether it's a private M&A or public M&A, losing momentum is definitely a trend of the current M&A environment," said Lance Sacks, a corporate partner at Baker McKenzie.

"There's still this valuation gap. Funding is readily available but it's got to make sense.

"Buyers and (corporate) boards are a lot more considered, a lot more diligent and a lot more cautious before they pull the trigger."

Peabody Energy in August pulled its $3.8-billion bid for Anglo's Queensland coal assets, while Brookfield and Bain walked away from $2.5-billion bids for Insignia Financial earlier in 2025.

The Australian financial services group in July signeda $2.2-billion buyout agreement with New York based CC Capital.

KWM practice leader for M&A David Eliakim said some bidders considering complicated deals were attempting to pre-empt future regulatory issues that could stem from FIRB, the ACCC or tax authorities.

"That has resulted in some harder issues being confronted and debated before bid documents are formally signed, creating more stress and tension than might otherwise be the case, which in turn impacts whether transactions are executed."