M&A investment hits three year high for UK’s large firms
Overall volumes down but UK performing well against the rest of Europe
M&A deals funded by bank loans increase
Nottingham, 07 January 2013 Experian ®, the global information services company, today revealed that 2012 was the most active year in terms of ‘mega deals’ in the UK since 2009, fuelled by a 15 per cent upturn in the number of very large transactions.
The number of very large ‘mega deals’ worth over £1billion announced in 2012, increased from 34 in 2011 to 39 - worth a total of £128 billion.
The majority of these ‘mega deal’ transactions were cross-border in nature. It included the £5bn acquisition of NDS Group, a Middlesex pay TV software firm, by California-based Cisco Systems Inc. and the £4.6bn investment of Nottingham-based retail chemist group Alliance Boots by US drugstore chain, Walgreen Co.
Across the UK, the overall number of mergers, acquisitions, flotations, rights issues and placements announced fell by 3 per cent, from 4,683 transactions in 2011 to 4,543 in 2012. This was led primarily by a decline in deal-making in the final quarter of the year, which saw volumes down by 11 per cent compared to Q4 2011. Thanks to the number of ’mega deals’ however, the total value of deals increased by 4.8 per cent, from £231 billion in 2011 to £242 billion in 2012.
Despite the fall in volume overall, the UK is performing well compared to the rest of Europe, which saw a 10.2 per cent downturn in deal volume announced in 2012, accompanied by a 10.5 per cent fall in their total value.
Meanwhile, the volume of transactions funded by bank debt increased by 11.6 per cent year-on-year, from 277 in 2011 to 309 in 2012.
Mezzanine-funded deals were also up, moving from 7 in 2011 to 12 in 2012. However, funding through venture capital dropped from 651 in 2011 to 595 in 2012. This is potentially due to slower growth rates which could impact on the level and speed of returns, making some opportunities appear less attractive to investors.
Market and regional picture
Looking at M&A activity in the UK by size of transactions, the mid-market range (those deals worth between £10m and £100m) were the worst affected, with deal volume down by 6.2 per cent year on year. The level of small (£0.5m to £10m) and large deals (£100m to £1bn) however, remained relatively static.
Despite a slight decline in UK M&A and ECM activity overall, there were bright spots; Northern Ireland enjoyed a boom year, with deal volume up by 36.8 per cent, as did Scotland (10.5 per cent) and the South West of England (7.3 per cent).
The most active sectors in the very large deals segment were Food and Beverage Manufacturing with 15.4 per cent of transactions, including Diageo Plc’s £1.3bn purchase of a stake in Indian drinks firm United Spirits Ltd in Q4 and the completion of Chinese conglomerate Bright Food (Group)’s acquisition of iconic British brand Weetabix for £1.2bn in November. The next most active sectors were Chemical Manufacturing (12.8 per cent of deals) and Professional and Business Services (10.3 per cent).
The International picture
The UK market has held up well over the last year in a global context. There was a British element in 47.3 per cent of all European transactions, up from 43.7 per cent in 2011, and in terms of value the UK contributed almost 42% per cent of the European total for 2012.
Elsewhere, deals in the Asia-Pacific region were down by 15.2 per cent in volume and 13.5 per cent in value, while in the USA activity was down by just under 5 per cent, and value by 6.4 per cent.
Wendy Driver, Business Development Manager at Experian UK&I, said: “Despite the challenges faced by the Eurozone crisis, the UK has proven to be one of the most attractive markets in what has been a subdued year for mergers and acquisitions globally.
“The quality of UK businesses and assets, as well as favourable interest rates, has been consistently attractive to overseas investors which is helping to keep mergers and acquisitions activity buoyant and may serve to boost confidence further."
For more detailed reports, please visit: http://www.experian.co.uk/consumer-information/experian-corpfin-resources.html
Mrs Gemma Wright
0115 992 2645/07813 854773
Notes to editors
The information was compiled and analysed by Experian Corpfin.
*Where consideration disclosed
Deal information is based on transactions announced between 1st January and 24th December, 2012, for 2012 figures, and between 1st January and December 31st, 2011, for 2011 figures. Target, bidder or parent of either party must be located in the region that is analysed in order to be included. The deal value of transactions covered in this report is £500,000 or above. Deal activity analysis referring to deal values is based on disclosed actual figures only.
Experian is the leading global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2012 was US$4.5 billion. Experian employs approximately 17,000 people in 44 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
For more information, visit http://www.experianplc.com.