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Cross-border deals outweigh UK domestic mergers and acquisitions

Merger and acquisition activity in the UK fell to its lowest levels in two decades, according to statistics from the Office of National Statistics (ONS).

Despite these figures, the value of deals made overseas by British firms increased by £1bn in quarter three in comparison with the same period in 2011, although the number of transactions decreased.

Inward acquisitions made by foreign businesses rose significantly in the third quarter, from £5.1bn to £8.6bn year-on-year, while the number of deals fell by more than half from 68 to 31.

Figures released on Tuesday which showed that a large section of merger and acquisition activity was “cross-border”, and was dominated by businesses at the top end of the market.

Data services company Experian also noted this trend in its monthly report in August, and commented on notable transactions between Japanese-based Dentsu and London-based Aegis for £3.2bn, and a US buy-out of Scottish research firm, Wood Mackenzie for £1.1bn made by private equity firm Hellman & Friedman.

British activity abroad was also noted by Experian, who highlighted a £633m purchase of Volvo Aero made by Midlands-based aerospace group GKN.

ONS said: “This series is volatile because the quarterly figures are often dominated by a small number of very large transactions.

“Cross-border M&A activity involving UK companies was dominated by a small number of large transactions, generally by businesses with strong balance sheets, who have access to credit on good terms. This could indicate some resilience in the M&A market.”

This was posted in Bdaily's Members' News section by Miranda Dobson .