Foreign takeovers of UK companies plummet amid M&A decline
The number of foreign investors launching M&A deals for UK companies plummeted in the fourth quarter of last year, with only £4.5bn spent by buyers from abroad.
According to data from the Office for National Statistics, the number of foreign companies acquiring UK companies (known as ‘inward M&A) fell to its to its lowest level since the pandemic during the quarter, dropping £5.9bn from the third quarter.
‘Outward’ M&A, or UK companies acquiring foreign companies, also saw a significant decline, falling from £3.9bn to £1.4bn.
The sharp fall from international deals was counteracted by a jump in domestic M&A deals throughout the quarter, increasing from £1.9bn to £8.6bn.
This total was boosted by two significant deals last quarter: Nationwide acquiring Virgin Money for £2.9bn, and Barratt acquiring Redrow for £2.5bn.
The ONS pegged the number of M&A deals during the last quarter at 402, down from the 464 in the third quarter of last year.
While deals dropped by a small amount across the quarters, there was significant volatility in the monthly totals as deals were hit extremely hard in December by both foreign and UK investors.
There were an estimated 186 M&A deals during October before falling to 151 in November and declining further to just 65 during December.
“These figures underscore the complexity of the current dealmaking landscape,” explained Sam Fuller, managing director at Houlihan Lokey’s Consumer Group.
“The macroeconomic backdrop facing UK businesses remains challenging with high levels of uncertainty and a nervous consumer outlook impacting sentiment, and the impending introduction of higher National Insurance contributions for employers and National Living Wage is likely to place further strain on corporate balance sheets.
“The global geopolitical picture adds another layer of complexity for the M&A market with uncertainty around US trade policy, the spectre of tariffs, and ongoing tensions in Ukraine weighing on investor confidence.”