08 October 2017

The Guardian: Brexit uncertainty cools foreign interest in UK buyouts

A study of UK buyouts and merger deals involving foreign firms showed that the value of purchases of British-owned businesses fell in the first nine months of the year to its lowest level since 2010.

The internal study by the consultancy EY, seen by the Guardian, found that the value of deals so far this year was roughly two-thirds of the average reported over the last seven years.

British firms are awash with cash after three years of bumper profits. The combination of strong balance sheets and the low pound was expected to make them the target of foreigns takeovers or mergers that involve selling a large portion of their business to foreign buyers.

But EY said the lack of interest in buying UK firms “suggests a possible fall in confidence” as the UK’s economic prospects have become clouded in uncertainty.

Mark Gregory, EY’s chief UK economist, said the UK was missing out on a global trend for an increasing number of mergers and buyouts, with firms in the eurozone experiencing a surge of cross-border activity in the last year.

He said: “The fall in the value of foreign mergers and acquisitions of UK companies suggests a possible fall in confidence about the UK’s economic prospects.

“There was a surge in foreign activity to $100bn in the two quarters after the referendum on EU membership, probably driven by the change in value of sterling, but this fell dramatically in the first quarter of 2017 to $6bn and total activity in 2017 to date is only just over $50bn.” [...]

Full article on The Guardian

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