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UK deal activity accelerated this week with the announcement of four takeover offers worth a total of £5.3 billion, underlining the country’s position as a leading European destination for mergers and acquisitions activities this year.
On Friday, the board of TI Fluid Systems, the FTSE 250 auto parts maker, recommended shareholders vote in favor of a £1 billion offer from Canada’s ABC Technologies, backed by Sponsored by Apollo Global Management.
This follows bid 701 million pounds of Macquarie for waste management group Renewi on Thursday and The sale was worth £351 million of Abu Dhabi-backed Fortress Investment Group’s Loungers pub and restaurant chain.
On Wednesday night, Direct Line also said it had refused £3.3 billion bid from larger rival Avivaprompting the FTSE 100 insurer to approach shareholders about its offer.
The turmoil has underlined the UK’s position as the most active trading hub in Europe this year. Activity accelerated after the October Budget, as traders were more certain to ramp up deals before the end of the year.
According to data from Dealogic, the value of mergers and acquisitions involving British companies, whether buying or selling, has reached $306.3 billion so far this year, up 57% year-on-year. last.
Activity among UK companies has outstripped that of the rest of Europe since the start of the year, with the total value of M&A activity over the same period in Germany, France and Italy reaching 143.2 billion respectively. USD, 142.3 billion USD and 91 billion USD.
Kirshlen Moodley, head of consulting at BNP Paribas in the UK, said: “We will certainly see more activity as there is a rebalancing of the market now that takes into account interest rates current and valuation levels.
“Britain is selectively strong. . . certainly the market will be much stronger than last year at this time,” he added, noting that stock valuations have long been much lower than in the US.
“[It] will always be an attractive market as it trades at a structural discount to its US peers,” Moodley said.
A surge in M&A activity in the UK could ease concerns about a slowdown under Keir Starmer’s government, which left businesses disappointed with last month’s £40 billion tax-hike Budget.
Lobby group CBI said this week that almost half of businesses in a recent survey have reduced headcount following the Budget, with a focus on tax increases for the private sector.
Despite such concerns, “people generally see a more stable environment in the UK”, said Iain Fenn, a partner at Linklaters.
“Last year was terrible. There were a lot of people looking at deals but we couldn’t get anything done,” Fenn said. “This year you’ve seen a steady increase in confidence throughout the year.”
Steven Fine, chief executive of stockbroker Peel Hunt, said the London market was “in the embryonic stages” of a recovery in the firm’s trading activity. “[M&A] won’t go away,” he said. “Our pipeline is very good.”
Half year results Posted on FridayPeel Hunt reported pre-tax profits of £1.2m, compared with a loss of £800,000 the previous year, thanks largely to a revival in UK trading and activity on two public listings . Group revenues rose by more than a quarter to £54m.
However, Fine warned that the IPO outlook remains bleak, saying the likelihood of a surge in London listings is “limited”, as continued capital outflows from UK equities are “draining support and keeps valuations low.”
M&A is “great, but you are losing companies”, he said, noting that 100 London-listed groups will be bid for, delisted or taken over this year.
The increase in trading activity is also profitable for London-based consulting firms. On Thursday, boutique consultancy group Robey Warshaw reported record sales and profits in its latest financial year thanks to a rise in transactions, Connect your four partners part of the £70 million profit fund.
