Despite the improvement in the financial markets and the expected transactions between FTSE 100 companies over the last quarter, the first half of 2009 was a dire period for the M&A
Despite the improvement in the financial markets and the expected transactions between FTSE 100 companies over the last quarter, the first half of 2009 was a dire period for the M&A market in the UK, according to a report by mergermarket.
The total number of deals in the first half of 2009 – 255 transactions – was down 66.4 per cent from the same period last year, and total deal value – USD31.5bn – down 70.7 per cent.
In comparison to global figures, the UK has suffered drops of one and a half times that of global M&A (down 44 per cent by value and 47 per cent by volume).
Compared to the last half of 2008, the total deal value was down 81.3 per cent while the total deal volume fell 37.3 per cent.
The value of inbound deal flow has seen a dramatic fall of 90 per cent compared to H1 2008, standing currently at USD7.3bn. Deal volumes are down 68 per cent with just 89 announced deals in H1 2009 compared to 279 for H1 2008.
Outbound activity has not fared much better suffering drops of 75.4 per cent by value and 55.9 per cent by volume.
Thanks to three giant transactions worth USD13.6bn, USD7.7bn and USD5.6bn – the takeover of Barclays Global Investors by BlackRock and the stake acquisitions by the British government in the Royal Bank of Scotland Group and in Lloyds – 48.8 per cent of the total value of the UK
M&A so far this year took place in the financial services sector.
In 2008, activity in the sector accounted for just 17.6 per cent of the total deal value. Five of the top ten deals in the UK this year are financial services transactions. However, the sector accounts for just 10.6 per cent of the total deal volume with 27 deals announced in H1 2009.
With industries such as construction, industrials and media particularly struggling, distressed situations have been taking centre stage, along with non-core disposals, providing cash-stripped companies with some financial relief.
Recent transactions such as Charterhouse’s acquisition of Wood Mackenzie from Candover for USD654.4m and Apollo Global’s acquisition of BPP for a multiple of some 12.2x are proof that there is still appetite and funding available for quality assets in the midsize range, the report says.
Bank of America Merrill Lynch, having advised on just nine deals worth USD33.2bn, is now the UK’s top financial adviser by value. UBS Investment Bank, last year’s leader by value, has dropped to fifth position, having advised on 21 deals for a value of USD19.7bn. JPMorgan Cazenove tops the mid-market league tables by both value and volume – advising on a total of 15 deals worth USD1.5bn – and now holds a comfortable lead over Citigroup in the value table and over Rothschild by volume.
Rothschild, ranked second by volume in 2008, now tops the UK league table by volume with a total of 24 deals, ahead of UBS Investment Bank. Deloitte, which led the volume table last year, has dropped to eighth place, having advised on just 13 deals this year.
Linklaters is the UK’s leading law firm, by both value and volume, for the first half of 2009. The firm has advised on 31 deals worth a total of USD50bn, holding a firm USD22.4bn lead over Wachtell, Lipton, Rosen & Katz in the value table.
