UK m&a value drops but mid-market m&a sees a
rebound
In the first quarter of 2010, 524 mergers and acquisitions worth
about £13.6 billion were recorded in the UK, according to Grant
Thornton's analysis of preliminary data*.
That represents a decrease of 14% in the
number of deals and a 22% drop in value compared to the 4th Quarter
of 2009, when 610 M&A transactions worth £17.5 billion were
announced. Year-on-year, the latest results are 6% higher in terms
of the number of deals but 68% lower in terms of total value (Q1
2009: 496 transactions worth £43 billion).
"The drop in the total M&A value is partly
due to there being fewer mega deals than last year. At the same
time, there is a rebound in activity in mid-market M&A. We have
not worked on so many M&A deals since the second quarter of
2008," commented Geoff Davies, head of corporate finance at Grant
Thornton UK LLP.
In the latest quarter there was also a drop in
the number of buyouts, recording 42 private equity deals with a
total value of almost £2.4 billion. This represents a 21% decline
in the number of deals compared to Q4 2009, when 53 transactions
with a total value of more than £2.9 billion were backed by
financial sponsors. In terms of value, almost 40% of the total
private equity value for 2010 stems from the £955 million-bid for
Pets At Home Ltd by Kohlberg Kravis Roberts & Co.
Year-on-year, the number of private equity
transactions increased by almost one third (31%), as financial
sponsors only backed 32 deals with a total value of £379 million in
the first quarter of 2009.
"There has been robust competition in our
sales processes among private equity and trade bidders, as well as
debt providers. The gearing model of 50% debt to equity is where
the market is today and banks are willing to support that level of
gearing for quality targets," said Geoff Davies.
Despite the devaluation of Sterling, the
number of foreign acquisitions of UK targets has not picked up
significantly: Q1 2010 recorded 162 foreign acquisitions of UK
targets with a total value of about £6 billion. This compares
positively to the first quarter of 2009, when only 130 such deals
worth £921 million were recorded, but is below both the average of
recent years and the 4th Quarter 2009 (186 foreign acquisitions,
total value £13.3 billion).
"We have seen an increase in interest by
overseas buyers particularly from the US and Europe and are about
to complete such a deal. It is hard to tell whether this interest
will translate to a renaissance of cross-border deals," concludes
Geoff Davies.
ENDS
For further information please
contact:
Alexander Wessendorff, PR Manager Grant Thornton UK LLP, 020
7728 2048.