Corporate mergers rise 16%

Oct 22 2008 by Peter McCusker, The Journal

BARGAIN hunters and firms looking to join forces to survive the financial crisis boosted corporate dealmaking last month, new figures show.

Completed UK corporate mergers and acquisitions rose 16% month-on-month to 99 in September, bucking the trend for sharply slower deals in the wake of the credit crunch, according to business advisory firm Deloitte.

Announced corporate deals also showed a double digit rise, ahead by a quarter at 162, compared to 121 seen in August.

M&A activity across the corporate and private equity sectors plunged 41% in the three months to the end of September, but the pick-up last month provided “hope in the face of adversity”, said Deloitte.

Activity in the North East also fell 40% to £70m in the third quarter, according to analysts Corpfin last week.

Andrew Grimstone, head of corporate transaction services at Deloitte, said that while September is traditionally better after the summer lull, this year’s rise came as a surprise.

“While the landscape has changed and businesses are being more cautious, those with strong balance sheets will be looking to take advantage of lower prices and others will be forced into disposals or mergers to survive.

“There may be gloom on the high street, but for well positioned corporates, bargain hunting is back in fashion,” he said.

The credit crunch has also continued to constrain private equity activity. Just 21 private equity deals completed in September, down from 37 in August and less than half the 49 seen in September 2007.