Foreign predators snap up record£81bn of British firms
Wednesday 05 March 2008
The value of UK companies falling into foreign hands hit record levels last year, according to Government numbers, marking the country's fourth consecutive year as a net seller of companies.
The Office of National Statistics (ONS) yesterday revealed that the value of UK-based companies bought by foreign predators hit £81.4bn last year, the most since its records began in 1969. This marks a rise of almost 5 per cent on the previous year's total of £77.8bn.
The largest completed transactions included one by a consortium headed by the private equity giant Kohlberg Kravis Roberts, which secured high-street healthcare chain Alliance Boots for £11bn, as well as Japan Tobacco, which bought Gallaher Group for £7.5bn.
Last year also proved a milestone for UK-based companies buying abroad, with the value of completed transactions running at the highest annual level since the ONS started tracking the data at the turn of the century.
UK Plc bought £58.1bn worth of deals in 2007, up from £37.4bn the previous year, with the last three months proving particularly strong. In the three months to the end of December, the value of deals more than doubled to £25.8bn over the previous quarter, dominated by Rio Tinto's £18.5bn takeover of Alcan. Other highlights were FirstGroup's £1.9bn takeover of Laidlaw International, and the London Stock Exchange's £1.3bn acquisition of rival Borsa Italiana.
Sebastian Grigg, head of UK and Ireland investment banking at Credit Suisse, said he was not surprised by the trends. "Most sectors in the UK market are relatively consolidated. We would expect a similar degree of consolidation across Europe, and that is now happening. We live in a global economy and the merger market is a function of that." He added that the tag of "UK company" could be misleading, as some companies with London headquarters have relatively few operations in the region.
The UK still ran a £23.3bn deficit in mergers and acquisitions last year. Domestic consolidation also slowed, as the value of completed deals within the UK fell from £28.5bn to £26.3bn. The slowdown stood out in the fourth quarter as the value of deals slumped to £2.7bn from £7.8bn in the previous three months, the worst quarterly performance for six years.
The domestic sector looked "distinctly lacklustre", said David Brooks, head of M&A at Grant Thornton, the accountancy group. "One of the key factors driving down both the volume and value of domestic M&A is that many buyers are waiting for a general correction in business valuations. As yet, there hasn't been a marked drop in prices, and several of our clients in a variety of sectors believe there may still be bargains to be had in the coming months."
The M&A markets have slowed considerably since the onset of the credit crunch last year. The full effects are yet to be reflected in the ONS statistics, though, which recorded completed rather than announced transactions. But Mr Brooks remains positive. "In a downturn comes new opportunities, and UK buyers with healthy balance sheets and strong forecast earnings should still be able to make timely acquisitions without having to go cap in hand to the bank."
- 1 Which country would be hardest to invade?
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 4 Floyd Mayweather's mouthguard costs $25,000 - enough to fly to Las Vegas and back 18 times
- 5 Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
Which country would be hardest to invade?
Morgan Freeman on the riot-focused coverage of the Baltimore protests: 'F**k the media'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
The man who filmed the Freddie Gray video has been arrested at gunpoint
Nepal earthquake: Many survivors receiving no help despite relief effort
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
Indonesia executions live: 'Hysterical' families heard prisoners being shot dead by firing squad
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
EU exit would hit UK economy much harder than neighbouring countries, study finds
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...