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?Mega deals? rise in UK?s large corporations

The number of “mega deals” made in the UK reached its highest point since 2009 last year, says data services firm, Experian.

Large transactions worth over £1bn rose from 34 made in 2011 to 39 made in 2012, and came to a total of £128bn.

Experian said the majority of agreements were across international borders, including high-profile deals such as Nottingham-based Alliance Boots’ receipt of £4.6bn investment from U.S. drugstore chain Walgreen Co.

Beverages firm Diageo acquired a stake in Indian drinks company United Spirits for £1.3bn, while Weetabix’ brand was bought by Chinese conglomerate Bright Food.

Mergers and acquisitions (m&a) made inside the UK were down, with some areas of the country affected more than others.

In East Anglia, the value of deals made fell by 66%, and in the South East this figure dropped by 30%. In comparison, the value of deals made in Greater London rose by 35.5%.

This downturn in activity was offset, however, by the few larger agreements made during the year, which made the UK a forerunner in Europe for deal activity.

The rest of continental Europe saw a 10.2% fall in the volume of deals, along with a 10.5% drop in value. Deals backed by mezzanine funds were on the rise, up from 7 in 2011 to 12 last year.

However, Experian highlighted a drop in venture capital funding from 651 to 595 year-on-year, which it put down to a slowdown in growth rates. The so-called “mega deals” cheered by Experian mostly occurred within large corporations, while in the mid-market, businesses experienced significant blows to m&a activity.

Deals worth between £10m and £100m were the worst affected, with a 6.2% dip in volumes compared with small and large deals which remained relatively static.

Food and drinks businesses were the most active, with a 15.4% rise in the number of transactions made, while chemical manufacturing deals were up 12.8% and agreements made in professional and business services rose by 10.3%.

Britain was present in 47.3% of all transactions made across Europe, and the UK contributed nearly 42% of the value of all deals, in comparison with the U.S. where activity was down 5% and values were down by 6.4%.

Experian’s Business Development Manager for the UK and Ireland, Wendy Driver, said: “Despite the challenges faced by the Eurozone crisis, the UK has proven to be one of the most attractive markets in what has been a subdued year for mergers and acquisitions globally.

“The quality of UK businesses and assets, as well as favourable interest rates, has been consistently attractive to overseas investors which is helping to keep mergers and acquisitions activity buoyant and may serve to boost confidence further.”

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