Tough times still lie ahead for the market
Nov 18 2009 by Paul Mankin, The Journal
DEAL volumes in the North East remained static for the third quarter of 2009 with 26 transactions completing in the three months ending 30 September.
For the first nine months, deal volumes were down by almost 40 per cent compared with the same period last year. Comparable figures from Thomson Reuters for European M & A activity show a decline of almost 48%.
Regional disclosed deal values for the quarter were nearly £37m, significantly up on the last quarter but once again figures for the first three quarters of 2009 showed a decrease in value of over 75% on the previous year.
The oil and gas sector remained active with Wellstream disposing of its onshore Flexsteel business to US company Prime Natural Resources, an oil and gas exploration and production company. The US$30m disposal will allow Wellstream to focus on its core offshore business. Activity by other North East PLCs was limited with Go-Ahead acquiring the assets of East Thames Buses from Transport for London for £5m. The business operates nine bus routes and has an annual turnover of around £24m. According to Go-Ahead, the acquisition will increase its market share in the capital to 21.5%.
James Fisher continued to diversify. Originally a shipping business, the company is a leading service provider in the marine industry and a supplier of specialist engineering services. The latest acquisition of engineer MB Faber for up to £5.25m will bolt on to the group’s existing nuclear business.
Onyx Group, the Middlesbrough-based IT company, acquired Moffat Communications from Grant Thornton in August. Moffat is a specialist IT provider to the financial services sector with expertise in hedge funds. Onyx, which was listed in The Sunday Times Tech Track 100, has grown both organically and through acquisitions.
Private equity activity has all but disappeared during the recession and again there were no major investments during the quarter.
During the quarter the FTSE100 reached its highest level for more than a year and commentators are predicting growth in the coming quarter will mark the end of the recession. Conditions in the UK M&A market look set to remain tough for some time.
:: Paul Mankin is corporate finance director at PricewaterhouseCoopers, Newcastle. For further information telephone (0191) 269-4318 or email paul.mankin@uk.pwc.com
