In quarter 2 (Apr to Jun) 2015 the total number of mergers and acquisitions (M&A) involving UK companies continued to record historically low levels of activity
There were 93 successful domestic and cross-border M&A transactions involving UK companies reported in quarter 2 (Apr to Jun) 2015, compared with 118 in quarter 1 (Jan to Mar) 2015
In quarter 2 (Apr to Jun) 2015 there were 46 completed domestic acquisitions (UK companies acquiring other UK companies). This is similar to the level of domestic M&A activity reported at quarter 1 (Jan to Mar) 2015 (43 transactions)
In quarter 2 (Apr to Jun) 2015 there were 21 completed inward acquisitions of UK companies made by foreign companies, the lowest number since quarter 1 (Jan to Mar) 2013, when 19 transactions were reported
The number of mergers and acquisitions made abroad by UK companies (outward M&A) fell to 26 in quarter 2 (Apr to Jun) 2015, from 48 in quarter 1 (Jan to Mar) 2015
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This release covers Mergers and Acquisitions (M&A) transactions that result in a change of ultimate control of the target company and have a value of £1 million or more. Information on the number and value of transactions are reported, in addition to whether transactions are acquisitions or disposals. Figures relating to mergers are included within acquisitions and those relating to demergers are contained within disposals. These statistics are presented on a current price basis, which are prices as they were at the time of measurement and are therefore not adjusted for inflation.
In Q2 2015 there were a total of 93 successful domestic and cross-border mergers and acquisitions involving UK companies. This included 46 domestic transactions, 21 inward transactions and 26 outward transactions representing a 21% fall on Q1 2015 (118) and a 11% fall on the number recorded in Q2 2014 (104).
The quarterly numbers and value of M&A activity are prone to large quarter-on-quarter movements, as these data relate to specific ‘one time’ only transactions. For example, one quarter can be heavily impacted by one large transaction. This is particularly the case for the deal value. Therefore it can be more appropriate to analyse trends over time. Overall, during Q2 2015 the total number of domestic and cross-borders mergers and acquisitions involving UK companies remained at a much lower level than before and immediately after the 2008-09 the economic downturn.
The level of overall M&A activity during Q2 2015 can also be placed in context by comparing the levels of M&A activity involving UK companies with the average number, value and average value per transaction of consecutive five-year intervals since 1997 (see table 1 below).
At Q2 2015 the number of mergers and acquisitions abroad made by UK companies (26) is the same as the average number recorded between 2012 and 2015 Q1(26), and still remains below all previous 5 year periods. However, during the same period the average value of outward M&A per transaction increased from £167 million to £414 million at Q2 2015.
The number of mergers and acquisitions of UK companies by foreign companies (inward M&A) in Q2 2015 (21 transactions) showed a 38% decrease when compared with average estimates for 2012-2015 Q1 (34 transactions). This number remains below all previous 5 year periods. In contrast, the average value per transaction between Q2 2015 and 2012-2015 Q1 increased from an average value per transaction of £159 million to £377 million at Q2 2015.
In Q2 2015, the average number of domestic M&A fell to 46 transactions, from 55 during 2012-2015 Q1, a fall of 16%, remaining below all previous 5 year periods.. However, the average value per domestic transaction at Q2 2015 (£49 million), reflected an increase of 75% when compared with the average value for 2012-2015 Q1 (£28 million).
At Q2 2015 the average value of all M&A involving UK companies showed increases in the average value per transaction. However, the number of transactions at Q2 2015 compared with 2012-2015 Q1 fell for both inward and domestic M&A while outward M&A remained unchanged. Overall, this indicates that although there were fewer successful acquisitions and mergers involving UK companies in the second quarter of 2015 compared to 2012-2015 Q1, those transactions which did complete were of a higher monetary value.
Table 1: The average number and value of M&A involving UK companies, grouped into five year intervals, 1997 to 2015
|Abroad by UK companies||Overseas companies in the UK||Between UK companies|
|Number||Value (£m)||Average value per transaction (£m)||Number||Value (£m)||Average value per transaction (£m)||Number||Value (£m)||Average value per transaction (£m)|
|Source: Office for National Statistics|
|1. At Q1 2010 the deal identification threshold for the mergers and acquisitions surveys was raised from £0.1 million to £1.0 million. There is therefore a discontinuity in the number of transactions reported as illustrated above.|
|2. Average value per transaction.|
|3. Quarter 4 is Oct to Dec 2014,Quarter 1 is Jan to Mar 2015, Quarter 2 is Apr to Jun 2015.|
|4. At Q2 2015 the actual number of completed deals is used to calculate the average value per transaction.|
Download this table Table 1: The average number and value of M&A involving UK companies, grouped into five year intervals, 1997 to 2015.xls (34.8 kB)
During Q2 2015, the number of successful M&A of UK companies by other UK companies (domestic M&A) increased slightly when compared with the previous quarter (Q1 2015). However, domestic M&A at Q2 2015 continued to remain well below the levels reported before the 2008-09 economic downturn (Figure 2).
In Q2 2015 there was a 7% increase in the amount of domestic activity involving UK companies buying other UK companies compared with Q1 2015. There were 46 completed domestic acquisitions reported in Q2 2015 compared with 43 acquisitions in Q1 2015. The total number of domestic acquisitions in Q2 2015 (46) was down on the figure of 51 for Q2 2014, a decrease of 10%.
The value of domestic acquisitions involving a change in majority share ownership increased by 47% between the first and second quarters of 2015 (from £1.5 billion in Q1 2015 to 2.2 billion in Q2 2015). The increase in the value of domestic transactions at Q2 2015 follows a similar trend to that of the first half of the previous year.
Comparison of domestic M&A over the first half (Q1-Q2) of 2015 shows that the combined total value of these acquisitions (£3.8 billion) was higher than that for the same period in 2014 (£3.2 billion). The combined number of domestic acquisitions in Q1 and Q2 2015 fell slightly, from 91 for the same period in 2014, to 89 in 2015. This may indicate that although fewer domestic acquisitions completed during the first half of 2015, those that did were of a higher monetary value.
The total number of domestic M&A can be split into those made by independently-controlled companies and those which are subsidiaries. The acquisition of an independent company means the purchase of a company in its entirety, whereas the acquisition of a subsidiary means the acquisition of a part of a company between 50.1% to 100%.
During Q2 2015 the number of acquisitions of independently-controlled companies (31), totalling £1.4 billion, represented the majority (67%) of the total number of completed domestic acquisitions and mergers (46).
In comparison, domestic acquisitions involving subsidiaries between UK company groups (15), valued at £0.8 billion, accounted for 33% of the overall total number of domestic acquisitions involving a change of majority ownership.
Significant domestic acquisitions, valued at £100 million or more, that took place during Q2 2015.
Greene King Plc of the UK acquired Spirit Pub Company Plc of the UK.
Kier Group Plc of the UK acquired MRBL Ltd of the UK.
Towry Finance Co Ltd of the UK acquired Ashcourt Rowan Plc of the UK.
Circassia Pharmaceuticals Plc of the UK acquired Prosonix Ltd of the UK.Nôl i'r tabl cynnwys
During Q2 2015, mergers and acquisitions of UK companies by foreign companies, involving a change of majority ownership continued to indicate low levels of inward M&A activity for the 10th consecutive quarter, with the exception of Q3 2013. The number of inward M&A at Q2 2015 remained well below the levels reported before the 2008-09 economic downturn (Figure 4).
In Q2 2015 there were 21 completed inward acquisitions of UK companies made by foreign companies, compared with 27 in the previous quarter (Q1 2015). This reflects a fall in the level of inward M&A activity of approximately 22% and is the lowest number of acquisitions made by foreign companies since Q1 2013, when 19 acquisitions were successful.
The value of inward M&A increased by 32% between the first and second quarters of 2015 from £6.0 billion reported in Q1 2015 to £7.9 billion in Q2 2015. The value of inward M&A reported at Q2 2015 (£7.9 billion) is the highest reported since Q2 2013 (£23.5 billion).
One large publicly reported share transaction which completed during Q2 2015 was undertaken by Banco de Sabadell S.A. of Spain, which acquired TSB Banking Group Plc of the UK.
In Q2 2015 there were 11 successful inward disposals with a total value of £2.5 billion compared with 6 in Q1 2015, valued at £1.1 billion. One disposal which completed in Q2 2015 was KSL Capital Partners International of the Cayman Islands, who sold MHDV Holdings (UK) Ltd of the UK
Other notable inward transactions, valued at £100 million or more, that took place in the UK by foreign companies during Q2 2015
Nikon Corporation of Japan acquired Optos Plc of the UK.
Slater and Gordon Ltd of Australia acquired Professional Services Division of the UK
Brother Industries Ltd of Japan acquired Domino Printing Sciences Plc of the UK.
Verisk Analytics Inc of the United States acquired Wood Mackenzie Ltd of the UK
Frasers Centerpoint Ltd of Singapore acquired MHDV Holdings (UK) Ltd of the UK
Associated Newspapers Ltd of Bermuda acquired Ulysses Enterprises Ltd of the UK.
Wumei Holdings Inc of China acquired CMW (UK) Ltd of the UK.
Actavis Plc of the Republic Ireland acquired Auden McKenzie Holdings Ltd of the UKNôl i'r tabl cynnwys
During Q2 2015 the number of UK companies that acquired foreign companies (outward M&A) involving a change of majority ownership, also continued to show much lower levels of M&A activity than before the 2008-09 economic downturn (Figure 5).
Between Q1 and Q2 2015, the number of outward mergers and acquisitions made by UK companies saw a notable fall. There were 26 completed outward mergers and acquisitions during Q2 2015, a 46% decrease compared with the previous quarter (48). This decrease between Q1 and Q2 2015 appears to follow a similar pattern to that seen between Q1 and Q2 of the previous year.
Despite the decrease in the number of M&A abroad by UK companies for Q2 2015 the value of outward M&A increased by £1.4 billion, from £9.4 billion in Q1 2015 to £10.8 billion in Q2 2015, a 15% increase. This may indicate that although fewer outward M&A were successful during Q2 compared with Q1 2015, the actual transactions which did complete were higher in value.
The value of outward M&A reported in Q2 2015 (£10.8 billion) indicates a notable increase of £8.3 billion when compared year-on-year with the value reported at Q2 2014(£2.5 billion).
Over half (56%) of the entire value of outward M&A (£10.8 billion) in Q2 2015 can be explained by one large completed acquisition within the Insurance industry sector by Aviva Plc of the UK which acquired Friends Life Group Ltd of Guernsey.
The quarterly estimates for the number and value of disposals of foreign companies made by UK companies during Q2 2015 have been suppressed in this bulletin to avoid any potential disclosure in this type of M&A activity.
Other notable acquisitions valued at £100 million or more, that took place abroad by UK companies in Q2 2015:
International Game Technology Plc of the UK acquired International Game Technology Inc of the USA.
Old Mutual Plc of the UK acquired UAP Holdings Ltd of Mauritius.
Circassia Pharmaceuticals Plc of the UK acquired Aerocrine AB of Sweden.
DS Smith Plc of the UK acquired Sulipo Zweite Beteiligungsverwaltungs GmbH (Duropack GmbH) of Austria.
Imperial Tobacco Group Plc of the UK acquired Assets of Reynolds and Lorillard Inc of the USA.
Just Eat Plc of the UK acquired Menulog Group Ltd of Australia.Nôl i'r tabl cynnwys
Global merger, acquisitions and disposals activity can be driven by the availability of credit. Therefore, when credit conditions deteriorate, as happened in the 2008-09 economic downturn M&A activity declines. M&A activity can also be interpreted by the economic outlook and company profits, in addition to a range of other economic factors.
The Bank of England’s (BoE) Credit Conditions Survey for Q2 2015 reported that credit availability for the corporate sector was unchanged in Q2 2015.
The BoE’s June 2015 Agents’ Summary of Business Conditions reported that corporate credit availability had improved in recent months as banks competed with each other on both price and non-price factors but this varied by firm size and sector. Credit was most readily available for the largest firms and those with strong cash flows.
The Office for Budget Responsibility (OBR) in its July 2015 Economic and Fiscal Outlook reported that business investment grew by 2.0 per cent in the first quarter of 2015, higher than the average quarterly growth rate in 2014. Also that Bank lending to non-financial companies remained subdued with recent signs of an improvement in annual growth lending to SMEs.
The Competition and Markets Authority (CMA), which has the power to investigate mergers in the UK, in its quarterly update also reported increased activity. This year the CMA has currently opened 21 mergers cases
Thomson Reuters noted that worldwide M&A had increased by 40% in the first half of 2015 and was the strongest half since 2007.
The half-year 2015 edition of Mergermarket’s EMEA M&A Deal Drivers reported that while deal volume has slowed, deal value has seen a significant boost on last year’s figures.Nôl i'r tabl cynnwys
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