Mergers & acquisitions

Reflecting global trends, the NZX faces a declining number of issuers, with private markets being an increasingly competitive transactional alternative for vendors. While the NZX has significantly improved its issuance processes, the time, cost and residual risks associated with a public market IPO are greater compared to private market transactions. The ongoing reporting obligations continue to present challenges for issuers and the traditional benefit of being listed, namely access to capital, is increasingly well accommodated for by private equity and other fund investors.

The Minister of Commerce and Consumer Affairs announced plans to reform certain aspects of New Zealand’s capital markets. Phase 1 of the reforms has commenced and seeks, among other things, to remove the mandatory requirement to prepare prospective financial information (PFI) when preparing a product disclosure statement (PDS) for an IPO and lift thresholds for climate related disclosures. The reform aims to improve market competitiveness and to more closely align with Australia.

Phase 2 of the reforms will, amongst other things, review the PDS requirements in relation to equity and debt offers with the aim of lowering costs for issuers and enhancing usability for investors.

The PwC New Zealand M&A Quarterly Update reports on M&A activity in New Zealand while also providing commentary on the global and local M&A outlook for the year ahead. Deal activity in New Zealand increased compared to the first quarter of 2025. ¹

Overseas investors can acquire a New Zealand business or entity in a number of different ways. An acquisition will typically be structured according to regulatory and tax considerations, whether the parties prefer a share or asset sale, and whether the target entity is privately held or publicly listed.

Acquisitions of privately held companies are generally undertaken by agreement between the seller and the purchaser.

The acquisition or change of control of an entity that is listed on the NZX, or private entities with 50 or more shareholders and 50 or more share parcels and are at least ‘medium-sized’, must be structured as a takeover offer under the Takeovers Code or a Scheme of Arrangement under the Companies Act (see more on the takeovers regime below). The NZX Listing Rules will also apply to mergers and acquisitions involving NZX listed companies.

The New Zealand overseas investment regime regulates mergers and acquisitions that involve an overseas person (or overseas controlled entity) seeking to make an investment in significant business assets or sensitive land in New Zealand. This regime also seeks to manage risks to New Zealand’s national security and public order (see Overseas investment regulations section).

Before agreeing the commercial aspects of a transaction, investors should seek advice regarding any regulatory requirements and conditions that will apply. Entering into a transaction that is subject to the Takeovers Code or Overseas Investment Act, for example, could have significant legal, reputational and financial implications if not managed correctly.

New Zealand company law is governed by the Companies Act. Most major merger and acquisition transactions will require the approval of a company’s shareholders by a requisite majority.

For example, a New Zealand company must not enter into a “major transaction” (broadly, a transaction worth more than half the value of the company’s assets) unless the transaction is approved (or contingent on approval) by a special resolution of its shareholders, which requires at least 75% of the shareholder votes to be in favour of the transaction.

New Zealand securities laws may apply if New Zealand financial products are being offered as consideration (see Capital markets section). There are a number of exclusions and exemptions under the Financial Markets Conduct Act that may apply.

Additional regulatory approvals may be required for a sale/disposal transaction depending on the nature of the industry that the target business is involved in. For example, insurance businesses will be required to obtain approval from the Reserve Bank of New Zealand prior to a merger or acquisition transaction being completed.

Takeover activity is regulated by the Takeovers Code. The Takeovers Code restricts investors and their associates from undertaking certain transactions that impact their voting rights in a “code company”. 

The purpose of the Takeovers Code is to regulate the change of control of code companies so that all shareholders have equal opportunity to approve or participate in changes of control. 

A code company is any New Zealand company that is listed on the NZX or which has 50 or more shareholders and 50 or more share parcels and is at least medium-sized. A medium-sized company is, broadly, a company that, together with its subsidiaries, has at least NZ$30 million in assets or NZ$15 million in revenue in the most recent accounting period. The Takeovers Code is enforced by the New Zealand Takeovers Panel (an independent Crown entity). 

The transactions that are captured by the takeovers regime primarily involve those where a person (together with their “associates”) increases their ownership of voting rights in a code company above 20% (i.e., by initially crossing the 20% threshold or, if already above 20%, by increasing their ownership stake further). 

Once a person and their associates hold 20% or more of the voting rights in a ‘code company’, there are specific rules about how and if that person and their associates can increase their shareholding. In summary, a person can increase their shareholding above the 20% threshold by way of:

• a takeover offer to shareholders for some or all of the code company shares, for an offer price. Shareholders are free to decide whether or not to accept the offer
• obtaining the approval of other shareholders
• creeping acquisitions of up to 5% of the company’s shares over a 12-month period, if the person already holds between 50% and 90% of the voting rights in the code company
• an approved exemption

Once a person and their associates control 90% or more of the voting rights of a code company, they become a ‘dominant owner’ and may either complete a compulsory acquisition of the remainder of the voting rights or notify the remaining shareholders that they have the right to sell their shares to the dominant owner.

An alternative to conducting a takeover offer under the Takeovers Code is a scheme of arrangement that allows the change of control of a code company to be approved by the court under the Companies Act. 

One of the key differences between a takeover offer and a scheme of arrangement is that, under a takeover offer, the offeror controls the process, offer price and offer terms (subject to compliance with the Takeovers Code). This means that a takeover offer can be used for a friendly or hostile takeover. A scheme of arrangement can be used to effect the same outcome as a takeover offer, but the target code company controls the process (with some involvement from the offeror and the shareholders). Accordingly, a scheme of arrangement can be an attractive option to effect a “friendly” takeover, potentially providing offerors greater likelihood of success once the target board approves the transaction.

A scheme of arrangement can also be used to achieve other outcomes involving the reconstruction of the company’s shares, assets or liabilities. 

Some of the key features of a scheme of arrangement include:

1. Certainty of outcome for the offeror (that is, if the scheme is not approved by the court, the offeror will not acquire any shares), although, the court process can be time consuming and poses execution risk in its own right
2. The voting requirement to approve a scheme of arrangement is generally lower than voting thresholds required under the Takeovers Code
3. There is greater flexibility to incorporate terms into a scheme of arrangement that would not be permitted under a takeover offer

The Takeovers Panel retains a role with scheme of arrangement transactions including providing the court with a letter of no objection, which essentially provides the court comfort that scheme disclosures are “code equivalent” and that the Panel has considered whether all shareholders can vote together or whether there should be separate votes of different classes of shareholders.

Whilst mergers and acquisitions can bring many benefits to the New Zealand economy through efficiency and innovation, some transactions have the potential of substantially lessening competition and creating anti-competitive outcomes for consumers. The Commerce Act 1986 (Commerce Act) prohibits conduct that substantially lessens competition. The purpose of the Commerce Act is to promote competition in markets for the long-term benefit of consumers within Aotearoa New Zealand.

Restrictive trade practices

The Commerce Act prohibits restrictive trade practices such as:

• contracts and arrangements that substantially lessen competition in a market
• cartel provisions including unauthorised price fixing, restricting of output or market allocation
• misusing substantial market power by engaging in conduct that has the purpose or likely effect of substantially lessening competition in that market
• resale price maintenance by a supplier of goods to ensure that their goods are not resold below a minimum price.

Clearance and authorisation on business acquisitions

The Commerce Act prohibits a person from acquiring another business’ assets or shares (including by merger) if doing so will have the effect of substantially lessening competition in a market. Businesses proposing to acquire another business’ assets or shares may apply to the Commerce Commission for clearance or authorisation of the acquisition. It is not mandatory to apply for clearance or authorisation of a proposed acquisition, however this would provide parties with certainty to proceed if they are uncertain whether (or know) the proposed transaction would substantially lessen competition in a market. 

The Commerce Commission grants a clearance where it considers that the proposed acquisition will not be likely to substantially lessen competition in a New Zealand market. If the Commerce Commission grants a clearance in relation to a transaction, the parties are protected from future legal action under the Commerce Act provided the acquisition is made in accordance with the clearance and while the clearance is still in force. 

The Commerce Commission may grant an authorisation to permit an acquisition to go ahead even if it considers that the acquisition would result in a substantial lessening of competition, in circumstances where the acquisition would result in a benefit to the public that outweighs the competitive harm.

Clearance and authorisation applications to the Commerce Commission must be submitted before the acquisition is unconditional.

Breach of the Commerce Act

The Commerce Commission takes an active enforcement role and can investigate mergers or proposed mergers that may raise competition concerns and where the merging parties have not applied for or do not intend to apply for, clearance or authorisation prior to the transaction completing (a non-notified merger). The Commerce Commission can seek interim relief or take enforcement action in the High Court.

Penalties for breaching the Commerce Act are substantial. An individual that breaches the restrictive trade and business acquisition provisions may be fined up to NZ$500,000. A company could be fined up to the greater of NZ$10 million, three times the commercial gain resulting from the breach, or 10% of the company’s group turnover for a specific period. An individual that commits an offence relating to cartel provisions may also face imprisonment for up to seven years.