Sharp M&A slowdown over the first quarter

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The Independent Online

The recent earthquake in Japan and the eurozone financial crisis have contributed to a sharp fall in merger and acquisitions activity at companies listed in the UK.

The main market of the London Stock Exchange and the Aim growth market saw the completion of just 14 deals in the first quarter of the year, down 39 per cent on the 23 deals sealed in the previous three months, and 61 per cent lower than the 36 completed in the first quarter of 2010, according to a survey by the law firm Wedlake Bell.

However, this cannot wholly be explained by a dearth of interest in M&A activity, as it is partly down to the "increased breakdown" of merger talks. In fact, 14 London-listed companies have suffered the breakdown of takeover talks over the past six months, including the transaction targets De La Rue, JJB Sports, Blacks Leisure, Mouchel and 888 Holdings.

Tim Bird, a partner and head of the corporate team at Wedlake Bell, said: "Deal activity amongst UK listed companies is still going on but it does seem to have reached a temporary slowdown. Events in Japan and the Middle East, and the continued eurozone debt crisis, have undoubtedly blunted buyers' ardour."

The slowdown in mergers and acquisitions activity is mirrored in a deceleration in flotations. Wedlake Bell said there were just 14 initial public offerings on the main stock exchange and Aim during the first quarter of 2011, a 61 per cent fall on the 39 that got away in the last three months of 2010.

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