Belfast Telegraph

UK firms' acquisition activity on the up with surge in overseas takeovers

The value of merger and acquisition (M&A) activity involving British firms jumped in the second quarter, thanks to a surge in overseas takeovers by UK businesses.

Data released by the Office for National Statistics (ONS) on Tuesday showed that UK companies took part in 155 successful deals worth a total of £30 billion in the second quarter, compared to £16.5 billion worth of deals in the first three months of the year.

Overseas takeovers by British firms accounted for 24 of those deals, totalling £18.3 billion between April and June.

It marked the biggest value for outbound M&A transactions since the start of 2011 when the total reached £19.8 billion, but the most recent figures were aided by Reckitt Benckiser's recent 21.2 billion US dollar takeover of American baby formula maker Mead Johnson Nutrition.

The number of British takeovers by foreign firms was much higher at 44 deals, though the value of those acquisitions was a mere £2.9 billion.

Domestic firms snapped up 62 independent UK companies during the period, while a further four domestic acquisitions involved subsidiaries of British firms.

The post-Brexit fall in the pound was widely expected to result in a rise in foreign takeovers, as it made British firms cheaper for overseas buyers. The reverse was forecast to be true for British firms, which would find it more expensive to buy up foreign firms in pounds.

Meanwhile, the ONS said it recorded the first period of net disposals of UK companies by foreign firms since 2002.

While British businesses made six foreign disposals worth £1 billion, overseas businesses got rid of UK businesses at a faster rate, dumping 15 UK operations worth £3.8 billion.

The Bank of England warned in its May inflation report that uncertainty surrounding Brexit negotiations was "likely to weigh" on investment intentions in the coming years - a trend which could impact overall M&A activity involving British firms.

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