There were a total of 140 successful domestic and cross-border mergers, acquisitions and disposals involving UK companies worth £34.0 billion in Quarter 3 (July to Sept) 2016, compared with 278 successful transactions valued at £33.1 billion reported in Quarter 2 (Apr to June) 2016.
There has been a notable increase in both the number and value of inward and domestic mergers and acquisitions (M&A) activity during the first three-quarters of 2016 (Jan to Sep), while outward M&A activity has fallen. The large values reported for inward and domestic M&A over this period are largely driven by a few notable high-profile transactions.
Domestic acquisitions (UK companies acquiring other UK companies) during Quarter 3 2016 saw 72 completed acquisitions worth £3.2 billion. This was a decrease compared with the activity reported in the previous quarter (152 acquisitions worth £7.2 billion), and an increase compared to the same quarter last year (60 deals worth £1.2 billion).
There were 41 completed inward M&A transactions (foreign companies acquiring UK companies) valued at £28.4 billion in Quarter 3 2016. The number of successful transactions were down compared with the previous quarter (71 transactions valued at £22.0 billion), and an increase compared to the number reported in the same quarter in 2015 (37 deals worth £8.3 billion).
Quarter 3 2016 saw 27 successfully completed outward M&A transactions (UK companies acquiring foreign companies) worth £2.4 billion. This marked a fall in number of deals when compared with the previous quarter (34 deals valued at £1.7 billion), and when compared to the same quarter in the previous year (39 deals valued at £2.1 billion.Nôl i'r tabl cynnwys
We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have and would be particularly interested in knowing how you make use of these data to inform our work. For further information please contact us via email: email@example.com or telephone Sami Hamroush on +44 (0) 1633 455087.Nôl i'r tabl cynnwys
The estimates produced for mergers and acquisitions (M&A) are vital and important components of foreign direct investment (FDI) flows data (inward and outward) and UK Balance of Payments statistics. M&A data are also published in the Blue and Pink Books.Nôl i'r tabl cynnwys
This release covers mergers and acquisitions (M&A) transactions involving UK companies that have been successfully completed, 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.
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. Therefore it can be more appropriate to analyse trends over time.
Data published in this bulletin for Quarter 1 (Jan to Mar) and Quarter 2 (Apr to June) 2016 have been revised in light of new information. No revisions to the 2015 data have been made and therefore time series data for all quarters of 2015 and any previous historic quarterly periods remain unchanged.
Quarter 3 (July to Sept) 2016 saw the estimates for the total number of completed domestic and cross-border M&A transactions involving UK companies fall when compared with the numbers seen during the previous quarter, Quarter 2 2016.
There were a total of 140 successful domestic and cross-border M&A involving UK companies in Quarter 3 2016, valued at approximately £34.0 billion. This total included 72 domestic acquisitions valued at £3.2 billion; 41 inward acquisitions valued at £28.4 billion and 27 outward acquisitions valued at £2.4 billion.
The number of domestic and cross-border M&A in Quarter 3 2016 reflects a 49.6% fall on the number recorded in Quarter 2 2016 (278 transactions) and also a 9.1% fall on the number of M&A seen in the same quarter of the previous year (Quarter 3 2015) when 154 transactions were recorded.
Overall, the number of successfully completed M&A transactions involving UK companies has remained broadly stable since the 2008 to 2009 economic downturn, albeit with quarter-on-quarter volatility.
In comparison, the total value of completed domestic and cross-border M&A during Quarter 3 2016 (£34.0 billion) saw a slight increase of 2.7% when compared with the value reported in Quarter 2 2016 (£33.1 billion). This was mainly attributable to an increase seen in the value of inward M&A between Quarter 2 2016 (£21.9 billion) and Quarter 3 2016 (£28.4 billion).
Recent M&A statistics can be put into context by comparing the most recent quarter with consecutive 5 year intervals since 1997 (Table 1).
During Quarter 1 1997 to Quarter 2 2016 (20-year interval) the average value per transaction of completed inward M&A has increased. Similarly, outward M&A also reported higher average values during the 10-year period of Quarter 1 2007 to Quarter 2 2016.
In comparison, domestic M&A has seen a gradual decrease in average value per transaction during Quarter 1 1997 to Quarter 2 2016.
Average outward M&A
The quarterly average number of outward acquisitions during 1997 to 2001 (5-year interval) was reported as 128 completed acquisitions, with an average value of £159.0 million per transaction. The average number of outward acquisitions experienced a decline during the following 10 years, falling to a quarterly average of 67 outward acquisitions, with an average value of £119.0 million, by the end of 2011. Between Quarter 1 2012 and Quarter 2 2016, the average number of outward acquisitions fell further, giving a quarterly average of 30 transactions; however, the average value per transaction increased to £157.0 million.
During Quarter 3 2016, the number of completed outward M&A was 27, with an average value per transaction of £90.0 million.
Average inward M&A
During 1997 and 2001, the quarterly average number of completed inward acquisitions was 54, with an average value of £183.0 million per transaction. The following years (2002 to 2011) experienced relatively stable levels of inward M&A activity. However, between 2012 and 2016, the quarterly average number of inward acquisitions fell to 38, while the average value per transaction rose to £249.0 million.
In Quarter 3 2016, the actual number of completed inward acquisitions (41) saw evidence of a slight increase in the number of successful inward M&A, along with a notable increase in the average total value of inward M&A to report £692.0 million. The increase in the value of M&A reported in Quarter 3 2016 was driven by a few notable high profile transactions, most notably the acquisition of ARM Holdings Plc.
Average domestic M&A
During the 15-year period between 1997 and 2011, the average number of domestic acquisitions saw a downward trend. The quarterly average number of domestic M&A for 1997 to 2001 was 136, with an average value of £80.0 million. During 2002 to 2006, domestic M&A saw an upturn in the quarterly average number of transactions (164). However, the quarterly average value saw a fall to £39.0 million per transaction. The following 5-year interval (2007 to 2011) saw the average quarterly number of domestic M&A fall to 121, with the average value per transaction remaining stable at £40.0 million.
During the interval Quarter 1 2012 to Quarter 2 2016, the average value of the 66 completed domestic acquisitions was £38.0 million, showing a slight decline in the value of domestic M&A activity.
In Quarter 3 2016, the number of completed domestic acquisitions saw an upturn of M&A activity and increased to 72 successful domestic acquisitions, with an average value of approximately £44.0 million per transaction.
Table 1: The average number and value of mergers and acquisitions involving UK companies, grouped into 5 year intervals, 1997 to 2016
|Abroad by UK companies||Overseas companies in the UK||Between UK companies|
|Number||Value||Average value||Number||Value||Average value||Number||Value||Average value|
|1997 to 2014 Q4||80||10,440||130||49||9,481||193||126||6,426||51|
|1997 to 2001||128||20,402||159||54||9,900||183||136||10,921||80|
|2002 to 2006||79||6,812||86||46||9,203||200||164||6,448||39|
|2007 to 2011||67||8,014||119||54||11,813||219||121||4,807||40|
|2012 to 2016 Q2||30||4,619||157||38||9,443||249||66||2,506||38|
|Source: Office for National Statistics|
|1. At Quarter 1 2010, the deal identification threshold was raised for the mergers and acquisitions surveys was raised from £0.1 million to £1 million. There is therefore a discontinuity in the number of transactions reported as illustrated in the table.|
|2. Average value per transaction.|
|3. Quarter 1 is January to March, Quarter 2 April to June, Quarter 3 July to September and Quarter 4 is October to December.|
|4. At Quarter 3 2016, 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 mergers and acquisitions involving UK companies, grouped into 5 year intervals, 1997 to 2016.xls (28.7 kB)
Notes for summary:
- Quarter 1 is January to March, Quarter 2 is April to June, Quarter 3 is July to September and Quarter 4 is October to December.
During Quarter 3 (July to Sept) 2016, the number and value of mergers and acquisitions (M&A) of UK companies by other UK companies (domestic M&A) saw notable decreases when compared with the unusually high numbers and values reported for the first and second quarters of 2016; although remain above the average recorded since 2012.
There were 72 completed domestic M&A during Quarter 3 2016, a decrease on the 152 acquisitions reported for Quarter 2 (Apr to June) 2016.
A high-profile domestic M&A transaction completed during Quarter 3 2016 was J Sainsbury Plc of the UK’s acquisition of the entire ordinary share ownership of Home Retail Group Plc of the UK, which accounted for 34.1% of the total value of domestic acquisitions (£3.2 billion).
Other notable domestic transactions, valued at £100 million or more, that took place during Quarter 3 (July to Sept) 2016
The total number of successful domestic M&A can be split between 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% ordinary share ownership.
In Quarter 3 2016, domestic M&A involving independently controlled companies (60) were valued at £2.9 billion and represented the majority (83.3%) of the total number of completed domestic M&A (72). Domestic M&A involving subsidiaries between UK company groups (12) were valued at £0.4 billion and accounted for the remainder of domestic M&A (72) transactions involving a change of majority ordinary-share ownership.Nôl i'r tabl cynnwys
During Quarter 3 (July to Sept) 2016, the number of successful inward mergers and acquisitions (M&A) involving a change of majority ownership saw a notable decline when compared with the number reported for the second quarter of 2016. However, the value of completed inward M&A during Quarter 3 2016 reported an increase when compared with the value reported for Quarter 2 (Apr to June) 2016. (Figure 4).
There were 41 completed inward M&A of UK companies during Quarter 3 2016, 30 transactions fewer than the number reported for Quarter 2 2016 (71 transactions).
A large publically reported majority share transaction which completed during Quarter 3 2016 was ARM Holdings Plc, a UK technology company which was acquired by SoftBank Group Corp of Japan.
Other inward notable transactions, valued at £100 million or more, that took place during Quarter 3 (July to Sept) 2016
The provisional quarterly estimates for the number and value of successful disposals of UK companies made by foreign companies (inward disposals) during Quarter 3 2016 have been suppressed in this bulletin to avoid any potential disclosure in this type of M&A activity.Nôl i'r tabl cynnwys
In Quarter 3 (July to Sept) 2016 the provisional estimates for the number of UK companies which successfully acquired foreign companies (outward mergers and acquisitions (M&A)), involving a change of majority ownership, saw a slight fall in level of activity when compared with the previous quarter (Quarter 2 2016). However, the value of completed outward M&A reported in Quarter 3 2016 actually saw an increase when compared with Quarter 2 (Apr to June) 2016.
There were 27 completed outward M&A made by UK companies involving a change of majority ownership in Quarter 3 2016, down from 34 reported for Quarter 2 2016.
A notable acquisition completed in Quarter 3 2016 was Melrose Industries Plc of the UK which acquired Nortek Inc of the USA.
Other notable transactions, valued at £100 million or more, that took place abroad by UK companies in Quarter 3 (July to Sept) 2016
- Unilever Plc of the UK acquired Dollar Shave Club Inc of the USA
- 3I Group Plc of the UK acquired Schlemmer Gmbh of Germany and SIB Immobiliere of France
The provisional quarterly estimates for the number and value of successful disposals of foreign companies made by UK companies (outward disposals) during Quarter 3 2016 have been suppressed in this bulletin to avoid any potential disclosure in this type of M&A activity.Nôl i'r tabl cynnwys
Mergers and acquisitions (M&A) data in this release only includes information for acquisitions, mergers and disposals which were successful and legally completed. As part of the production process we also identify both announced and agreed M&A transactions.
The following notable transactions will feature in future M&A releases:
Global merger, acquisitions and disposals activity is often driven by the availability of credit and company profits, as well as a sense of confidence in the economic outlook. The majority of large mergers and acquisitions (M&A) transactions involve some element of borrowing or leveraging. Therefore when credit conditions deteriorate, as happened in the 2008 to 2009 economic downturn, M&A activity also tends to fall. However, it is worth noting that the process of completing an M&A transaction does take time, therefore lags can be expected before changes in the economic environment are reflected in M&A activity.
The following section is designed to add additional context to the release and includes information taken directly from external sources with relevant hyperlinks provided.
The Bank of England’s (BoE) Inflation Report for November 2016 highlighted the heightened level of uncertainty around the economic outlook following the EU referendum. In the context of this uncertainty, the Bank of England’s (BoE) Agents’ Summary Report for Quarter 3 (Jul to Sep) 2016 reported “that investment intentions had fallen since the referendum and pointed to broadly flat business investment over the year ahead”. Similarly, the Bank of England’s (BoE) Credit Conditions Review for Quarter 3 reported “that the demand for corporate credit from businesses weakened in Quarter 3 2016”.
The Deloitte Chief Financial Officers (CFO) Survey – Quarter 3 2016 stated in its key findings that Brexit weighs on corporate risk appetite and remains a top business concern.
The Office for Budget Responsibility (OBR) in its November 2016 Economic and Fiscal Outlook, reported “that bank lending to both large businesses and small and medium-sized enterprises (SMEs) started to rise in 2016 after a long period of weakness. Business lending growth also dipped following the referendum before picking up again in September. Growth in lending to large businesses has picked up more in recent months than lending to SMEs – reaching 3.6% and 2.1% respectively in the year to September. Small firms are more reliant on bank lending than larger firms that can access non-bank forms of finance (for example, issuing bonds)”.
Ernst & Young Global Ltd (EY) a global leader in assurance, tax, transactions and advisory services, in their Global Capital Confidence Barometer report for October 2016, reported “that executives are looking at more targets, and M&A deals will tend to be smaller. However, as boards look to make innovative acquisitions, they are using analytics to make better decisions”.
Allen & Overy, an international legal practice, in their Global M&A Trends Q3 2016 reported that “in most regions and sectors the values of deals continued to shrink in the third quarter, although deal volumes have fared better. While some investors are ploughing on with significant transactions, others appear to be holding back while they try to make sense of current political and economic uncertainties. Although Quarter 3 is traditionally a quiet quarter, the decline in the overall value of transactions has been particularly marked this year. It is clear that investors are trying to come to terms with significant political and economic worries”.Nôl i'r tabl cynnwys
The Mergers and acquisitions Quality and Methodology Information document contains important information on:
- the strengths and limitations of the data and how it compares with related data
- users and uses of the data
- how the output was created
- the quality of the output including the accuracy of the data
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