Deloitte: UK-US M&A deal corridor reaches £60 billion in 2015, and is expected to increase in 2016
11 February 2016
Last year outbound M&A activity from US buyers into the UK reached £32.7 billion, while outbound M&A from the UK to the US was worth £25.6 billion, a total of £58.3 billion, according to new analysis from Deloitte. By volume, US acquirers completed 322 M&A deals in the UK, while the UK managed 176 deals in the US last year, but increasing deal activity in every quarter. This means within the trading block of North America and Europe, the bilateral cross-border deal corridor between the US and UK is the most active.
Cahal Dowds, vice-chairman of Deloitte’s corporate finance advisory business commented: “There is an exceptional appetite for deal making across the Atlantic, coinciding with a slowdown in the emerging markets, a strong US dollar and sterling, and a similarity of business structures and styles. US and UK companies are holding record levels of cash balances, and with slow organic earnings growth, they are increasingly pursuing higher profits through M&A activity.
“What is striking is that although the US has done more deals, the UK was doing bigger deals for much of 2015, remarkable given US GDP is five times that of the UK’s. For the second and third quarters of 2015, UK M&A deals into the US were worth more than US deals into the UK.”
Looking back over the past ten quarters to end of 2013, the greatest number of US outbound M&A deals have been done in London (262 deals), followed by the South East (146), with another 51 deals in the UK’s Northern Powerhouse. For UK acquirers heading to the US, California is most popular state, with 83 deals completed there, followed by New York (61) and Texas (37). In terms of sectors, over 25% of M&A transactions involved technology, media and telecoms (TMT).
Cahal Dowds concluded: “Many TMT companies prefer to acquire new technologies than develop products in-house, which can take too long against rapidly changing consumer habits and innovation.”
“It is less surprising that the London-New York axis remains the strongest area of activity, with US outbound investors focusing heavily on the South East. However, in the consumer business sector, if you combined US activity in the Midlands, North and Scotland they outperformed the London and South East in the past ten quarters. This is significant as arguably the devolution story for the UK regions has further to go.”
“A good showing in the US and UK economies, the strength of their currencies, low interest rates and the availability of funding will ensure transatlantic M&A activity remains a busy hub in 2016.”
Data in the Deloitte M&A Deal Monitor are based on deal volumes and values in Thomson One Banker and Deloitte analysis. Note, deal value calculations are based on M&A deals for which value is disclosed – deal values are not disclosed for a significant proportion of M&A deals.
All value and volume calculations are based on announced deals which may not be completed; value calculations are based on deals for which value is disclosed, while volume calculations are based on all announced deals whether or not value is disclosed.
The Deal Monitor includes volume and value data for the most recent 10 quarters; in this edition data run from Q3 2013 to Q4 2015 inclusive. These findings are taken from the inaugural “US/UK M&A Deal Monitor” report, which is also available from Deloitte.
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The information contained in this press release is correct at the time of going to press.
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