UK M&A slumps

The M&A scene in the UK had a mixed start of the year according to UK law firm Freshfields Bruckhaus Deringer which has published a report into the state of the market.

The findings reveal that whilst deal volume in the UK for the first three months of 2008 is down a significant 36%, the average value is just 6% less than the same period last year, and cross-border M&A activity remaining stable in the face of economic uncertainty.

The opening quarter of this year saw 115 acquisitions of UK companies by UK companies, the lowest number since Q1 2003. Total value was £3.6bn, the second lowest number since Q1 2005. Included in this total is the £554m purchase of Alfred McAlpine by Carillion, and Easyjet’s acquisition of GB Airways for £104m.

Overseas business continues to find UK companies attractive, with 60 deals completed in Q1 2008, reaching a combined value of £19.9bn, a 116% increase on the closing quarter of last year and a 211% increase on the same time last year. Deals here included Imperial Chemical Industries buying of Akzo Nobel for a reported £8bn and Burren Energy acquired by Italy’s ENI for £1.7bn.

Despite a continued gradual decline in the number of foreign acquisitions by UK based businesses witnessed since the second half of 2006, deal values in Q1 2008 (£15.5bn) were in line with 2007 quarterly averages and represented the third highest quarterly foreign investment level since 2002. The most significant transaction in Q1 2008 was the acquisition by Imperial Tobacco of Altadis for a reported value of £9.3bn.

The findings are part of the latest M&A statistics published by the ONS and analysed by international law firm Freshfields Bruckhaus Deringer.