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Mergers and takeovers slump amid Brexit vote uncertainty

Published 06/09/2016

There was a 54 per cent slump in successful £1 million or more mergers and acquisitions between April and June, with 87 deals
There was a 54 per cent slump in successful £1 million or more mergers and acquisitions between April and June, with 87 deals

Corporate deal-making slumped amid uncertainty in the run-up to the Brexit vote as firms put merger and takeover moves on hold, according to official figures.

The Office for National Statistics (ONS) said there was a 54% slump in successful £1 million or more mergers and acquisitions between April and June, with 87 deals involving UK companies worth around £14 billion.

It marks a sharp decline on the 190 deals completed in the first three months of the year valued at £69 billion, which the ONS said was "unusually high".

The second quarter figures also show a 34% drop in deals year-on-year and mark the latest sign that M&A activity was hit by Brexit jitters.

The ONS added that f oreign M&A deals with UK firms fell to its lowest level for three years in the second quarter, with 20 deals compared with 52 between January and March.

The latest ONS data showed the number of domestic deals more than halved quarter-on-quarter, with 47 deals worth £5.9 billion against 95 transactions valued at £11.8 billion in the previous three months.

Liberty Global's £3.5 billion takeover of Cable and Wireless Communications was the biggest and most high-profile deal completed in the second quarter, according to the ONS.

There have been a number of deals scrapped since the Brexit vote, with Sir Richard Branson's Virgin Group revealing shortly after the referendum that it had pulled the plug on the acquisition of a UK firm employing 3,000 staff.

An Intralinks Deal Flow Predictor report last month also showed that early-stage M&A activity fell as much as 7.4% in the month after the Brexit decision.

But despite the referendum blow to M&A, Brexit bargain-hunting has helped spur on a number of deal announcements in recent weeks, led by SoftBank's £24 billion mega-takeover for Apple chip maker ARM Holdings.

The swoop by the Japanese firm for one of the UK's biggest technology companies came in spite of a rise in ARM's shares after the Brexit vote, thanks to its revenue stream outside the UK.

Other deals include South African retailer Steinhoff International's takeover of Poundland, which was announced after the referendum, although discussions were under way long before the vote.

Cinema chain Odeon & UCI was also snapped up by US firm AMC Entertainment for £ 921 million in the same week, with its new owner confirming the plunging pound was a major factor.

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