Third quarter set for M&A plunge

Sep 23 2009 by Peter McCusker, The Journal

THE third quarter of 2009 is likely to record the lowest number of mergers and acquisitions (M&A) involving UK targets since 1992, according to new figures from business and financial adviser Grant Thornton UK.

It shows that only 303 M&A deals have been announced in the UK since the beginning of July.

This is a decrease of 32% compared to the second quarter of 2009, when 449 M&A deals were announced. It is also 44% below the third quarter 2008, when 546 transactions were recorded.

Ian Marwood, Grant Thornton’s corporate finance partner for Yorkshire and the North East said: “We have seen the lowest number of foreign acquisitions of UK targets since 1992, while the number of domestic deals is the lowest it has been since 1991.

“At the same time, the total value of deals announced in the UK is likely to be higher in the year to date than at the same period last year, largely due to state investments in British banks.

“But we are seeing signs that M&A activity will pick up, including a number of listed British firms that are currently raising cash not just to repair their balance sheets but to prepare for acquisitions in the coming months.”

He went on to say that company values were now proving attractive to acquisitive companies.

He added: “An increasing number of privately owned British companies are also mandating us to assist them in investigating acquisition opportunities in the UK and overseas.

“Further indicators of a recovery of M&A activity include the £10.2bn takeover offer for Cadbury which is attracting rival bids, as well as the takeover bid for National Express by a private-equity-led syndicate and mid-market trans- actions such as the acquisition of Dalkia Technical Facilities Management by rival support services group Mitie.

“We are going to see a continuing trend of listed British firms being targeted as confidence is gradually recovering both in Britain and the US.”