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Bumper rise in US takeovers of UK businesses as EU interest wanes

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The value of M&A deals in which US companies took over UK business has more than doubled in the past year, as takeovers by EU-based companies slipped.

In total, the value of US takeovers in the year to the end of June this year skyrocketed from £36.8bn in 2016/17 to £79bn the past year, analysis by accountancy firm Moore Stephens found.

The 115 per cent rise was driven by a series of major deals, including tech giant Apple’s takeover of music-identification app Shazam for £299m, and the sale of investment software company Fidessa to enterprise software company Temenos Group for £1.3bn.

Read more: Why Coca-Cola’s acquisition of Costa makes sense for consumers

Moore Stephens suggested US businesses had “shrugged off” concerns of Britain’s exit from the European Union, with purchases partly driven by the devaluation of sterling since 2014, which has made some British companies comparatively cheaper than foreign rivals.

Recent moves have indicated the US takeover trend may well continue, with Coca-Cola’s planned purchase of cafe chain Costa Coffee for £3.9bn and insurance broker Marsh & McLennan’s £4.3bn deal to control UK insurance company Jardine Lloyd Thompson both pointed to as examples of sustained US interest by Moore Stephens.

Across the same time period, takeovers of UK businesses by EU companies fell by 5%, from £14.1bn to £13.3bn, with analysis suggesting more negative perceptions of Brexit on the continent had led EU business to be “more cautious” about investment in the UK.

Read more: Marsh & McLennan buys insurer Jardine Lloyd Thompson for £4.3bn

Damian Ryan, a partner at Moore Stephens, says: “Britain’s businesses continue to be some of the most attractive investment opportunities across the globe. It is a market too big to ignore.

“Whilst Brexit has created uncertainty, the underlying strength of UK businesses means that they continue to be great investment opportunities for overseas investors. US investors are the ones taking advantage of this right now.”