Foreign firms launch £7.8bn summer deals raid on British companies
A raid by international firms on UK companies accelerated over the summer as foreign buyers kicked off deals worth some £7.8bn – even as domestic mergers and acquisitions (M&A) slumped.
Foreign spending on UK companies rose by 16 per cent between July and September, thanks in part to the $976m (£769m) swoop by US-based Quanex in August on doors and windows supplier Tyman.
The rise in cross-border M&A came despite a downturn in activity between UK companies.
UK firms spent just £2.1bn acquiring domestic targets over the period, its lowest level since the first quarter of 2023, down from £3bn the prior quarter, according to figures from the Office for National Statistics.
The number of domestic M&A deals between July and September was just 191, the second lowest quarter since the pandemic in 2020.
A subdued level of domestic dealmaking dragged down the total number of M&A transactions to 435, down from 479 the quarter before.
“This decrease reflects the continued challenges facing the market, including elevated interest rates and broader macroeconomic uncertainty, which are continuing to weigh on investor sentiment and deal flow,” said Sam Fuller, managing director in Houlihan Lokey’s consumer group.
The managing director also suggested that the drop-off during August and September was due to key political events like the Budget and US election, “suggesting many businesses and investors have been adopting a more cautious wait and see approach in the last few months”.
A weak August and September weighed on the headline figure, with the latter registering just 52 domestic M&A transactions throughout the month, the second lowest month in at least three years.
However, Houlihan Lokey said it expects dealmaking to tick up this quarter and into 2025, thanks to greater clarity from the political outcomes.
“The resolution of the US election, in particular, has sparked a noticeable shift in market sentiment, restoring investor confidence and enabling businesses to proceed with greater strategic certainty,” Fuller added.
There has been a flurry of bumper dealmaking in London in recent weeks, with listed companies including TI Fluid Systems, Direct Line, FTSE 250 waste disposal company, Renewi, and Cosy Club owner Loungers all coming under offer.
The barrage of takeover bids for firms listed on the London Stock Exchange this year has jumped to £52bn in value. A total of 45 London-listed firms have been approached, agreed to, or completed acquisitions since January, according to data provided to City PM by investment bank Peel Hunt.