UK dealmakers unveil year-end push as M&A wave hits US$160 billion
A SUDDEN wave of mergers and acquisitions (M&A) activity has hit the UK this week, bucking concerns about a slowdown under the new Labour government and securing the country’s top spot among European dealmaking destinations.
Aviva on Wednesday (Nov 27) announced a £3.3 billion (S$5.6 billion) takeover bid for Direct Line Insurance Group, quickly followed a day later by Macquarie Asset Management’s offer to acquire Renewi for about £701 million. Both confirmed earlier reports from Bloomberg News.
ABC Technologies Holdings, which is backed by Apollo Global Management, is nearing an agreement to buy British manufacturer TI Fluid Systems for roughly £1 billion, sources with knowledge of the matter said this week. Fortress Investment Group agreed on Thursday to buy Loungers, operator of Cosy Club bars and Brightside restaurants, for £338 million.
The deals signal that the UK remains the easiest European market to do M&A, despite companies complaining about higher taxes under Prime Minister Keir Starmer’s new government and an exodus of the wealthy from the country. Deal volume in the UK rose 81 per cent to more than US$160 billion so far this year, double the US$82 billion tally from its closest rival Germany, according to data compiled by Bloomberg.
“We are seeing a good amount of pent-up demand now beginning to be released,” said Giles Dennison, partner at law firm Charles Russell Speechlys. The UK remains attractive for investors with a steady political environment and an economy that is more benign than others, he added.
Goldman Sachs is the leading adviser in the UK, followed by JPMorgan and Morgan Stanley, the data show. Citigroup and Barclays round out the top five. Transactions have spanned across all industries from paper to technology, and beverages to financial services. The biggest deal remains International Paper’s agreement to buy DS Smith for £5.8 billion as well as other large transactions such as the sale of Hargreaves Lansdown, Darktrace and Audiotonix.
Companies across sectors in the UK are valued at deep discounts to their intrinsic worth, according to Andy Briggs, chief executive officer of Phoenix Group Holdings, which provides life insurance and pension fund services. “In the context of that mismatch, you are likely to see more overseas CEOs look at the UK for dealmaking,” he said.
Dealmakers may be making a last push to secure fees before the end of the year. Unfortunately for some bankers, they may be forced to work over the holidays with some bid deadlines falling right on Christmas and Boxing Day.
Under UK takeover rules, Aviva has until 5 pm on Dec 25 to make a firm offer for Direct Line. Macquarie has until the end of the day on Dec 26 to announce whether it will proceed with a deal for Renewi or walk away. BLOOMBERG
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