Mergers and acquisitions involving UK companies: October to December 2020

Transactions that result in a change of ultimate control of the target company and have a value of £1 million or more.

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Cyswllt:
Email Lee Mallett

Dyddiad y datganiad:
9 March 2021

Cyhoeddiad nesaf:
8 June 2021

1. Main points 

  • In Quarter 4 (Oct to Dec) 2020 cross-border mergers and acquisitions (M&A) involving a change in majority share ownership all saw notable increases in both value and number, while domestic M&A recorded sizeable decreases. 

  • In Quarter 4 2020 estimates for the total value of inward M&A (foreign companies abroad acquiring UK companies) were £4.3 billion, which was higher than Quarter 3 (July to Sept) 2020 (£3.2 billion).

  • The value of outward M&A (UK companies acquiring foreign companies abroad) was £4.5 billion in Quarter 4 2020, an increase of £3.1 billion on the value recorded in the previous quarter (£1.4 billion).

  • Domestic M&A (UK companies acquiring other UK companies) was valued at £2.2 billion in Quarter 4 2020, which was lower than the previous quarter (£4.4 billion).

  • The amount of M&A activity has been affected by the global coronavirus (COVID-19) pandemic, where the number of completed deals were much lower in April and May 2020; monthly deals have followed a broadly flat trend since June 2020, though these were lower than the numbers completed per month over 2019.

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2. Monthly mergers and acquisitions (M&A)   

The amount of mergers and acquisitions (M&A) activity has been affected by the global coronavirus (COVID-19) pandemic, where the number of completed deals were much lower in April and May 2020. Since the fall in the monthly total of domestic and cross-border mergers and acquisitions (M&A) from 183 in March 2020 down to a low of 42 in May 2020, there was an upward trend in the number of deals to 116 in October 2020.  

The total number of M&A deals then fell by 32 between October and November, mainly due to fewer inward M&A deals between the two months, with domestic and outward M&A deals only seeing a slight decrease. The month of December saw a similar number of M&A deals to November.

Quarter 4 2020 saw 283 completed transactions, a slight decrease of eight when compared with the previous quarter (291), but a sizeable decrease of 150 when compared with Quarter 4 2019 (433).  

The total number of monthly M&A deals has followed a broadly flat trend since June 2020, yet these were lower than the numbers completed per month over 2019. For outward M&A, the number of deals did fall between March 2020 and May 2020, yet the number of deals completed in December 2020 (21) was very similar to that in March 2020 (24). The monthly number of domestic and inward M&A deals remained below the numbers in March 2020. There was a relatively large increase in domestic M&A deals between May 2020 (14) and June 2020 (44); likewise for inward from September (31) to October (57).

The Bank of England Agents' Summary of Business Conditions report for Quarter 4 2020 states that "Activity has recovered relative to troughs earlier in 2020", and reports "Investment intentions remained subdued overall, though some contacts are beginning to reinstate projects".

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3. Inward mergers and acquisitions (M&A) 

The estimates for the total value of mergers and acquisitions (M&A) of UK companies made by foreign companies increased by £1.1 billion to £4.3 billion in Quarter 4 (Oct to Dec) 2020 when compared with Quarter 3 (July to September) 2020 (£3.2 billion). This was £11.4 billion lower than the value of £15.7 billion recorded in Quarter 4 2019.  

 A few high value inward acquisitions which completed in Quarter 4 2020 were:  

  • Sampo Plc of Finland, which acquired Hastings Group Holdings Plc of the UK  

  • Perkinelmer Inc of the USA, which acquired Horizon Discovery Group Plc of the UK 

Lists of notable completed inward mergers and acquisitions valued in excess of £100 million and which took place in 2020,  can be found in previously published mergers and acquisitions quarterly releases.

Value of quarterly inward M&A transactions involving UK companies  

Number of quarterly inward M&A transactions involving UK companies    

There were 114 successful inward acquisitions by foreign companies in Quarter 4 2020, an increase of 25 transactions on the number reported in the previous quarter (89) and 35 fewer than Quarter 4 2019 (149).

There were 23 inward disposals of UK companies involving a change of majority share ownership during Quarter 4 2020. These were worth £0.4 billion, a decrease of £0.3 billion on the value reported in Quarter 3 2020 (£0.7 billion) when 29 disposals were recorded.    

In 2020 there were 446 completed inward mergers and acquisitions (M&A) worth a total of £16.3 billion compared with 609 inward M&A with a value of £55.5 billion recorded in 2019.    

Our Mergers and acquisitions involving UK companies, annual overview: 2020 provides further information on how M&A activity in 2020 compares with previous years.

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4. Outward mergers and acquisitions (M&A)

The value of outward mergers and acquisitions (M&A) UK companies acquiring foreign companies involving a change in majority share ownership in Quarter 4 (Oct to Dec) 2020 was £4.5 billion, a £3.1 billon increase compared with Quarter 3 (Jul to Sep) 2020 (£1.4 billion) and £1.5 billion increase on Quarter 4 2019 (£3.0 billion). 

Notable high value outward acquisitions in excess of £100 million and which completed in Quarter 4 2020 were:  

Lists of notable completed outward mergers and acquisitions valued in excess of £100 million and which took place in 2020, can be found in previously published mergers and acquisitions quarterly releases.

Value of quarterly outward M&A transactions involving UK companies 

There were 45 completed outward M&A deals during Quarter 4 2020, slightly more than the previous quarter (Quarter 3 (July to Sept) 2020) when 41 acquisitions were recorded, but 13 fewer than Quarter 4 2019 (58).

Number of quarterly outward M&A transactions involving UK companies  

During Quarter 4 2020 there were 10 outward disposals involving a change of majority share ownership. These transactions were valued at £11.1 billion, £10.9 billion higher than Quarter 3 2020 (£0.2 billion when seven disposals were reported. The increase in both the number and value of outward disposals seen in Quarter 4 2020 can largely be explained by additional large value deals completing. 

One notable large outward disposal which completed in Quarter 4 2020, was Aviva Plc of the UK which disposed of Aviva Limited Aviva Asia Pte Limited of Singapore.  

In 2020 the total value of completed outward mergers and acquisitions was £15.2 billion, £6.7 billion lower than the value in 2019 (£21.9 billion) and the lowest recorded since 2010 (£12.4 billion). There were 191 successful outward mergers and acquisitions during 2020, 70 fewer deals than in the previous year (261).  

Our Mergers and acquisitions involving UK companies, annual overview: 2020 provides further information on how M&A activity in 2020 compares with previous years, including on outward M&A disposals.

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5. Domestic mergers and acquisitions (M&A)

In Quarter 4 (Oct to Dec) 2020 the estimates for the value and number of domestic mergers and acquisitions (M&A) (UK companies acquiring other UK companies) was £2.2 billion, half the value previously recorded in Quarter 3 (July to Sept) 2020 (£4.4 billion) and explained by the completion of a lower number of higher valued acquisitions.   

A few notable large valued domestic acquisitions that completed in Quarter 4 2020 were:  

  • RWS Holdings Plc of the UK, which acquired SDL Plc of the UK  

  • Mitie Group Plc of the UK, which acquired Interserve (Facilities Management) Ltd of the UK  

Lists of notable completed domestic mergers and acquisitions valued in excess of £100 million and which took place in 2020, can be found in previously published mergers and acquisitions quarterly releases.  

Value of domestic M&A transactions involving UK companies by quarter

There were 124 completed domestic acquisitions involving a change in majority share ownership in Quarter 4 (Oct to Dec)  2020, 37 deals fewer than Quarter 3 (July to Sept) 2020 (161) and 105 fewer than Quarter 4 2019 (229).   

Number of quarterly domestic M&A transactions involving UK companies 

In 2020 the value of completed domestic M&A was £10.8 billion, an increase of £1.8 billion when compared with £9.0 billion recorded in 2019. This increase can be explained by the completion of more larger value domestic M&A transactions.

There were 605 completed domestic M&A involving a change in majority share ownership, in 2020, a sizeable decrease of 306 transactions on the number recorded in 2019 (911). 

Our Mergers and acquisitions involving UK companies, annual overview: 2020  provides further information on how M&A activity in 2020 compares with previous years.

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6. Data for mergers and acquisitions involving UK companies

Mergers and acquisitions involving UK companies
Dataset | Released 9 March 2021 
Quarterly estimates of the value and number of mergers and acquisitions and disposals involving UK companies worth £1 million or more.

Mergers and acquisitions involving UK companies – time-series
Dataset | Released 9 March 2021
Quarterly data on the value and number of mergers, acquisitions and disposals involving UK companies worth £1 million or more.

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7. Glossary

Domestic M&A

Mergers and acquisitions of UK companies acquiring other UK companies.  

Inward M&A

Mergers, acquisitions and disposals of UK companies by foreign companies.  

Outward M&A

Mergers, acquisitions and disposals of foreign companies abroad by UK companies.  

Mergers and acquisitions transactions

Mergers and acquisitions (M&A) occur when one company takes control of another company. The internationally agreed definition of a M&A deal is when one company gains more than 50% of the ordinary shares (or voting rights) of the acquired company.

Disinvestments (Disposal transactions)

Disinvestment or disposal transactions refers to a decrease in the ordinary share ownership of a subsidiary company.  

Transaction aggregates

The following are definitions of reasons why revisions to the aggregates for M&A transactions valued at £100 million and greater principally occur.

Completion of transactions

On announcement of a proposed transaction, an expected completion date is usually given. The publicly-reported values will be allocated to the quarter of expected completion. If the transaction is ultimately completed in an earlier or later quarter, the recorded values will be reallocated to the new quarter.  

Publicly-reported values

Publicly-reported values are initially used to compile the aggregates. These can vary considerably from the values ultimately supplied by the respondents, frequently because the assumption of debt has been included in the publicly-reported value. A nominal value is applied if no publicly-reported value is available. The final values used to create the aggregates are those supplied by the respondent.  

Non-completion of transactions

On announcement of a proposed transaction, the publicly-reported value of the transaction is recorded. If the transaction does not subsequently take place the recorded value will be deleted.  

Non-share transactions

On announcement of a proposed transaction, it may appear that there will be transactions in the share capital of the companies involved and the publicly-reported values will be recorded. If subsequent information contradicts this, the recorded values will be amended or deleted.  

Control

On announcement of a proposed transaction, it may appear that the transaction will give the purchasing company control of the purchased company, that is, a share ownership of greater than 50%. If subsequent information contradicts this, the recorded values will be amended or deleted.  

Revisions from M&A data source

The current source provider of M&A deal information continually updates its database. Therefore, any new and additional reported transactions which completed in previous quarterly periods will be included as revisions.  

Revisions from respondents

Very occasionally companies will restate the values that they have previously supplied to us.

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8. Measuring the data

Mergers and acquisitions (M&A) statistics from Quarter 1 (Jan to Mar) 2018 fully incorporate the Bureau van Dijk (BVD) Zephyr data source and methods. This new data source has increased the coverage of smaller M&A transactions and therefore results in a discontinuity in the number of transactions reported; users are therefore advised to take care when comparing the latest estimates with the number of transactions reported for quarters prior to Quarter 1 (Jan to Mar) 2018. See Mergers and acquisitions Quality and Methodology Information for more details.  

The previous M&A estimates for Quarter 1 (Jan to Mar) 2020, Quarter 2 (Apr to June) 2020 and Quarter 3 (July to Sept) 2020 have been revised to reflect new information received after our last publication in December 2020. The detailed revisions analysis is given in Table R1 which is attached to this publication.

No further revisions to estimates prior to Quarter 1 2020 have been made. Therefore, time series statistics for all quarters of 2019 and any previous historic quarterly and annual periods remain unchanged.  

After EU withdrawal

Now that the UK has left the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 1 January 2020. We will continue to produce statistics broken down to EU and non-EU aggregates.   

After the transition period, we continue to produce our mergers and acquisitions statistics in line with the UK Statistics Authority's Code of Practice for Statistics and in accordance with internationally-agreed statistical guidance and standards. This is based on the International Monetary Fund's (IMF's) Balance of Payments and International Investment Position Manual sixth edition (BPM6), until those standards are updated.   

Data published in Mergers and acquisitions involving UK companies statistical releases also form part of the broader system of UK National Accounts, which will be produced in line with international standards as laid down in the European System of Accounts (ESA) 2010 until the EU budgets are finalised for the years in which we were a member, as specified in the Withdrawal Agreement.

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9. Strengths and limitations

We produce statistics on the number and value of mergers and acquisitions (M&A) transactions. This information is presented in the following way:  

  • transactions are only recorded in Office for National Statistics (ONS) statistics once the deal has been legally completed  

  • each transaction has a value of at least £1 million  

  • the transactions results in a change of ultimate control of the target company   

  • all values are in current prices, and therefore have not been adjusted for the effects of inflation  

These are among the main reasons our M&A statistics can differ from those reported in other sources. There can be a substantial time gap between the point at which a deal is announced and when it is legally completed. In addition, in some cases, announced M&A deals do not take place. ONS statistics on disposals (or de-mergers) are also included in tables alongside this bulletin. These are typically fewer in number per quarter, which can lead to greater suppression of statistics to mitigate disclosure. The focus of this bulletin is on acquisitions, although some of the more complex deals can include the disposal of some part of the newly-created corporate structure.  

It is sometimes necessary to suppress figures for certain items in order to avoid disclosing information about an individual business. Further information on why statistics are suppressed is available in the Office for National Statistics (ONS) Disclosure Control Policy.

It is not uncommon for the value of M&A transactions to vary considerably from one quarter to the next. This mainly reflects the nature of M&A activity in that these capture one-off deals. Therefore, if a particularly high-value M&A deal completes in a given quarter, it can make that quarter seem out of line with those that precede and follow it.   

The volatility of M&A transactions also makes it difficult to link M&A statistics with other economic indicators – such as gross domestic product – or global events because of the time it can take between announcing and completing a M&A deal. It can therefore be more informative to look at longer-term trends within M&A statistics rather than focusing on quarterly movements. Details of any notable M&A deals that completed in Quarter 4 (Oct to Dec) 2020 can be found in the respective sections of this bulletin.  

Our data supplier, Bureau Van Dijk, have confirmed that there has been minimal impact on their activity from the economic restrictions introduced with the global coronavirus (COVID-19) pandemic. They report uninterrupted service from their operations. However, there could be an impact if companies' reporting processes take longer, although there is no conclusive evidence of this from transactions covered in this release.  

Contextual external evidence

Global merger, acquisitions and disposals activity can be driven by the availability of credit. Therefore, when credit conditions deteriorate, as happened in the 2008 to 2009 economic downturn, M&A activity may decline. M&A activity can also be affected by the economic outlook and company profits, in addition to a range of other economic factors. The process of completing a M&A transaction takes time and sometimes there may be a lag between improving economic conditions and any change in M&A activity. Therefore, it is important to consider the M&A data within the wider economic context.   

The following commentary summarises some external evidence from the Bank of England's (BOE) Credit Conditions Survey, Agents Summary of Business Conditions Report and the Monetary Policy Report.  

The Credit Conditions Survey for Quarter 4 2020 reported that "Lenders reported that the overall availability of credit to the corporate sector was unchanged in Q4 2020, decreasing for small businesses and remaining unchanged for medium and large firms. Overall availability was not expected to change in Q1 2021". The same report also stated that "Lenders reported that demand for corporate lending from small businesses decreased slightly in Q4 2020, and demand from medium sized businesses decreased whereas demand from large private non-financial corporations (PNFCs) increased over the same period. Demand for corporate lending was expected to decrease for small businesses in Q1 2021 but increase for medium and large businesses over the next quarter".  

The Agents Summary of Business Conditions report for Quarter 4 2020 stated that "Credit demand among small and medium-sized companies was reported to have increased in some cases as Covid-related restrictions came into effect. Contacts thought credit demand could rise further in the coming quarters as deferred payments, such as rent and tax, fall due in the first six months of 2021. Medium-sized companies reported an increase in merger and acquisition activity and banks were reported to have been willing to underwrite and provide credit for deals in certain sectors. Demand for bank credit from large corporates remained subdued, as many companies were able to raise finance elsewhere, for example in debt and equity markets. Although the government-backed loan schemes are supporting credit availability, especially for the smallest companies, there have been some reports of bank credit conditions tightening, particularly in sectors that had been most affected by the pandemic, and where insolvencies were expected to rise. There were also reports of trade credit insurance being reduced for companies in those sectors".  

The Monetary Policy Report for November 2020 stated that "Many contacts have cancelled or postponed investment, citing concerns about the strength of the recovery, their cash positions and uncertainty about the outlook. Investment intentions were particularly weak in the automotive, aviation and oil and gas sectors. Contacts also reported postponing projects such as office moves, workplace expansion and replacement of machinery in order to preserve cash. However, contacts in sectors experiencing strong growth, such as food production, renewable energy, warehousing and distribution, reported investing to increase capacity. Investment in IT and digital services remained strong as companies invested in remote working and online services. And there were a few reports of paused investment projects being reinstated. Credit demand among small and medium-sized enterprises (SMEs) was reported to have increased a little in recent weeks, in part due to renewed social distancing restrictions in some areas, and ahead of the closure of the Government lending schemes which had previously been due to finish at the end of November. Contacts thought credit demand could rise further in the coming quarters as deferred payments, such as rent and tax, come due. However, high levels of debt among SMEs could constrain the appetite of many to take on new debt. Demand for bank credit from large corporates remained subdued, as companies were able to raise credit in capital markets or elsewhere. Although the Government schemes are supporting credit availability, especially for the smallest companies, there have been some reports of bank credit conditions tightening, particularly in sectors that had been most affected by the pandemic, and where insolvencies were expected to rise".

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Lee Mallett
MA@ons.gov.uk
Ffôn: +44 (0)1633 455060