Horizontal Acquisition in Australia: 2025 Trends, Benefits & Risks

In the fast-evolving world of Australian business, growth strategies are becoming more sophisticated—and more scrutinised. One strategy that’s dominating headlines and boardroom discussions in 2025 is the horizontal acquisition. But what exactly does this mean for companies, shareholders, and the broader economy? And how are new regulations and market realities shaping this approach?

What is a Horizontal Acquisition—and Why is it Trending?

A horizontal acquisition occurs when one company acquires another operating in the same industry and at the same stage of production. Unlike vertical acquisitions (which target suppliers or distributors), horizontal deals are all about consolidating market share, reducing competition, and leveraging synergies.

• Market Expansion: Companies can quickly access new customers and geographies.

• Economies of Scale: Streamlining operations often results in significant cost savings.

• Competitive Edge: Reducing the number of players in a sector can lead to increased pricing power.

In 2025, a wave of horizontal acquisitions has swept through sectors like fintech, retail, and healthcare. This trend is driven by post-pandemic consolidation, digital transformation, and the search for resilience in a volatile global economy.

Real-World Examples: Who’s Merging in 2025?

Several headline-grabbing deals have put horizontal acquisitions at the centre of Australia’s business news cycle this year:

• Fintech Frenzy: In February, Afterpay rival Zip Co completed a $1.1 billion acquisition of Latitude Financial’s consumer finance division. The merged entity now controls over 40% of Australia’s buy-now-pay-later (BNPL) market, creating a powerful challenger to international players.

• Retail Consolidation: The supermarket sector saw a major shake-up when Coles acquired Harris Farm Markets in April. The deal, valued at $700 million, gives Coles a stronger foothold in the premium fresh food segment and signals further consolidation in Australia’s grocery landscape.

• Healthcare Scale-Up: Ramsay Health Care’s acquisition of Healthe Care’s hospital portfolio has created one of the largest private hospital networks in the country, allowing for streamlined services and expanded patient reach.

These deals highlight both the scale and diversity of horizontal acquisition activity in Australia—and reflect a broader global trend towards industry consolidation.

Policy Updates and Regulatory Scrutiny in 2025

With increased M&A activity comes heightened regulatory oversight. The Australian Competition and Consumer Commission (ACCC) has introduced new guidelines in 2025 to ensure that horizontal acquisitions do not stifle competition or harm consumers.

Key updates include:

• Mandatory Pre-Deal Notification: Companies in sectors with high market concentration (like banking, telecoms, and supermarkets) must notify the ACCC of planned horizontal acquisitions exceeding $250 million in combined revenue.

• Enhanced Market Impact Tests: The ACCC now conducts more rigorous assessments of how proposed deals could affect pricing, innovation, and consumer choice.

• Public Interest Reviews: For deals deemed to have significant social or economic impact, public consultations are now standard practice.

As a result, some deals have faced delays or additional conditions. For instance, the Coles-Harris Farm Markets acquisition was approved only after a commitment to maintain regional store presence and supplier diversity.

Risks and Rewards: What Should Businesses and Investors Watch?

While horizontal acquisitions can unlock substantial value, they’re not without pitfalls. Here’s what boards, investors, and business owners need to consider in 2025:

• Integration Challenges: Merging two companies with similar operations can lead to cultural clashes, technology redundancies, and staff layoffs.

• Regulatory Risks: With tighter ACCC oversight, deals may face delays, rejections, or costly undertakings.

• Market Backlash: If customers perceive reduced competition or choice, brands risk reputational damage and loss of goodwill.

However, when executed well, horizontal acquisitions can deliver rapid growth, improved margins, and a more robust competitive position. The key is strategic fit, clear integration planning, and transparent communication with all stakeholders.

The Outlook: What’s Next for Horizontal Acquisitions in Australia?

As 2025 progresses, expect further activity in industries facing technological disruption and regulatory change. Sectors like renewable energy, digital media, and aged care are ripe for horizontal consolidation, especially as businesses seek scale to meet new challenges and opportunities.

For investors, understanding the dynamics of horizontal acquisitions—and monitoring regulatory developments—will be critical to spotting winners and avoiding missteps in Australia’s changing corporate landscape.