Global M&A to remain sluggish until UK decides on EU exit plan: survey

[LONDON] Brexit jitters will dampen global appetite for mergers and acquisitions until Britain clarifies when and how it will negotiate an exit from the European Union, according to a survey of dealmakers published on Wednesday.

Some 70 per cent of 1,001 M&A professionals from around the world surveyed by technology provider Intralinks said the number of M&A deals would fall until Brexit worries subside.

The value of announced M&A deals worldwide dropped by a third in the second quarter of 2016, according to Thomson Reuters data, as a wave of transactions were abandoned in the wake of concerns over regulatory and tax risks or national security.

Dealmaking in Britain, which accounts for 7 per cent of global M&A volume, suffered before the June 23 Brexit referendum with M&A announcements down 85 per cent year-on-year in the second quarter, the Thomson Reuters data showed.

Two-thirds of respondents, surveyed by Intralinks between July 4 and July 8, said Britain leaving the EU would have a negative impact on global deal volumes for the rest of 2016.

"M&A levels are very sensitive to any uncertainty in the market," Intralinks vice president of strategy and product marketing Philip Whitchelo said in a statement.

"Unprecedented political upheaval in the UK is a cause for concern for dealmakers at the moment."

The survey also showed that 66 per cent of global dealmakers expect a drop in demand for British assets for the remainder of 2016 while 82 per cent of British dealmakers believed Brexit would have a negative economic impact on their region.

British Prime Minister Theresa May has said she will not trigger Article 50 of the EU Treaty, which starts the clock on Britain's exit from the bloc, before the end of 2016.

Despite the uncertainty from the June 23 Brexit referendum, a plunge in the pound has also lured some overseas buyers looking to snare British companies on the cheap.

REUTERS

For more coverage of the EU referendum, visit bt.sg/BrexiT