Belfast Telegraph

Eurozone crisis hits company mergers in UK

By Peter Cripps

The turmoil sparked by the eurozone debt crisis has caused a 14% fall in the number of UK takeovers and mergers, a report has revealed.

The declining number of deals in the first quarter of 2012 compared to the previous three months was driven by fears over a Greek default, Ernst & Young's M&A Tracker said.

The same trend was echoed on a global scale, with the number of deals down 24%. However, in the UK, a 41% rise in the average size of the deals to $264m (£167m) meant their total value rose 20%, beating the global picture where average transaction values increased slightly.

Jon Hughes, transaction advisory services leader at Ernst & Young, said: "The market uncertainty of late last year has clearly impacted transaction activity in the first quarter of 2012.

"That said, the small upswing in average deal values could indicate an increase in confidence amongst buyers - who whilst still cautious about undertaking transactions, are more willing to push through larger deals."

The proportion of deals in the UK financed by cash rose to 91% from 88% previously, driven by an increase in the number of companies sitting on large surpluses. This was much higher than the 55% of deals financed by cash on a global scale.