Mixed Messages On Outlook for M&A
The Times has a doom and gloom story. Sort of. They claim that Big, friendly or otherwise, takeovers are not offering that much entertainment. Accompanied, of course, with a BFG picture.
According to the Office for National Statistics, there has been a “notable decline” in the number and value of successful M&A transactions involving UK companies during the second quarter.
It said yesterday that there had been 87 successful domestic and cross-border mergers, acquisitions and disposals involving UK companies, worth a total of £14 billion, between April and June of this year. This was down…
Read more: Big, friendly or otherwise, takeovers are not offering that much entertainmentthumbnail courtesy of thetimes.co.uk
And there’s an entirely different picture being painted by industry insiders:
So far, 2016 has proved to be another busy year for corporate finance advisors, with deal volumes continuing to increase year on year. Whilst the number of transactions taking place has not quite reached the pre-recession levels seen in 2007, the number of deals taking place is continuing to increase, and if the volume of deals continues to grow at the same rate then we anticipate volumes will soon exceed pre “credit crunch” levels. Read more
City AM states that deals fell pre-Brexit and provides ONS stats to say that were 87 deals involving UK firms worth £14bn, a drop from 190 deal worth £69bn in the first quarter of the year.
The second quarter total figure included: 47 cases of UK companies acquiring other UK companies for £5.9bn; 20 deals worth £6.3bn in which UK companies were bought for foreign investors; and 16 foreign acquisitions worth £1.7bn by UK companies. The other four recorded were inward disposals worth £0.1bn.
With the acquisitions total (UK-UK, UK-foreign, foreign-UK) adding up to 83, this represents the quietest quarter in terms of number of deals on ONS records going back to 1990. The second lowest total was 85 in the first quarter of 2013. Read more
The FT states that since the referendum vote, the surprise result and the steep fall in the value of the pound against most currencies, M&A has picked up. Thank you very much, cheap pound.
For a country reeling from a sharp fall in its currency and the prospect of exiting the European Union, the sale of UK retailer Poundland could not have been more apt.
The question for corporate dealmakers, already struggling in one of the worst UK market for mergers and acquisitions in years, is whether falling share prices and the devaluation of sterling will be enough to spark further foreign interest in British businesses. Read more.