UK M&A creeps up in 2010

Mergers and acquisitions by UK companies crept up in 2010, with a five per cent increase in volumes on the previous year and a significant rise in cross-border acquisitions, but activity remains low relative to the decade’s peak

M&A activity by UK companies saw a five per cent increase in the volume of deals over 2010 on the previous year, and a 19% increase in value.

The level of activity is still low relative to the middle of the decade, however. In 2007, activity hit a high of 4,570 deals, dropping thereafter and only recovering enough to reach 2,896 deals in 2010.

Freshfields Bruckhaus Deringer LLP’s head of UK corporate practice Mark Rawlinson was cautious on the results, saying a glass half full or glass half empty perspective could be taken.

“2010 stands as the fifth highest or sixth lowest year in terms of UK M&A spend,” he said.

“While by the standards the market has been accustomed to in the middle of the decade it still looks pretty low, it is encouraging that the UK M&A market appears to be finally bottoming out and showing signs of recovery,” he added.

Cross-border acquisitions as a share of UK M&A meanwhile reached a 10 year high, accounting for 38% of all such activity over the past year.

Behind the UK itself, UK capital flowed mainly into the US, followed by India, France and Norway.

By sector, energy and power topped the market share of deals in 2010, replacing financials which dominated activity throughout 2009.

The total market share of financials dropped by 23.5%, from 40% in 2009 to 16.5% in 2010.

Energy and power experienced a similar change of 23% but as an increase.
In 2010, it made up a 30.2% share of deals, jumping from 7.2% in the previous year.

Industrials, followed by media and entertainment then real estate also saw further consolidation in 2010.

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