UK M&A slows further in second quarter as dealmakers await referendum

 
William Turvill
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General Election - Economy
The UK is voting today on whether to remain inside the European Union (Source: Getty)

A slow start to the year for UK mergers and acquisitions (M&A) activity continued into the second quarter with the EU referendum looming, new data released today shows.

Some $18.3bn (£12.4bn) worth of UK-targeted deals have been announced so far in the second quarter of 2016, down 53 per cent from $38.9bn in the first three months of the year, according to MergerMarket.

Deals from foreign acquirers fell even more sharply between the quarters, by 62.1 per cent from $32.8bn to $12.4bn.

Read more: The UK's share of the global M&A market is at a record low ahead of EU vote

Kirsty Wilson, a senior analyst at MergerMarket, told City A.M.: “Uncertainty is a big turn-off for deal makers. Domestic and foreign buyers are avoiding UK tie-ups until they are confident of a rewarding partnership.”

Dealogic also released M&A statistics today. These showed that, in the first half of 2016, the UK was the third most targeted nation for deals – behind the United States and China – with a volume of $68.6bn.

But this figure was down 65 per cent on the first half of 2015, a greater year-on-year fall than was experienced by any other nation in the top 10.

The number of UK-targeted deals fell by just five per cent, though, indicating the average value of the UK-targeted transactions has fallen.

Read more: Tech titans rule 2016 with $268bn of M&A activity

Globally, announced deal values counted by Dealogic have reached $826.9bn so far this quarter, up from $760.4bn, but down on the last three quarters of 2015, each of which surpassed $1 trillion. Overall deal value fell 27 per cent to $1.59 trillion.

In the first six months of the year, technology was the biggest target sector, with $286bn of deals announced.

Goldman Sachs was the biggest adviser, involved in 133 deals worth $408.4bn, followed by Morgan Stanley and Bank of America Merrill Lynch.

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