UK's special relationship with US remains (in M&A, at least)

William Turvill
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Deal values between the US and UK were down, but deal numbers increased, Deloitte found (Source: Getty)

The UK and US have maintained a special relationship in the mergers and acquisitions (M&A) world this year, according to a new report from Deloitte.

Despite a global slowdown in M&A activity, US corporates and private equity houses announced 168 UK-targeted deals in the first half of the year, meaning activity is flat year-on-year.

There has been an increase in activity going the other way, with 99 UK to US deals announced – a 32 per cent year-on-year increase.

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However, deal values have followed the general M&A trend of 2016. US acquirers announced $15.4bn (£11.6bn) worth of deals, down from $18.4bn. And UK buyers announced $4.5bn of deals, down from $9.2bn.

Deloitte believes the deal numbers are more important, though. “In the first half of this year, appetite for US-UK held acquisitions persisted, despite a global slowdown in M&A,” said Cahal Dowds, vice-chairman Deloitte UK.

“Furthermore, deal volumes are a more reliable indicator than values, which are not always disclosed. This means as individual countries, the US-UK ‘deal corridor’ is most active by volume.”

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But that does not mean the US-UK “deal corridor” might not be affected by an expected slowdown in activity in the second half of the year, post-Brexit and pre-presidential election.

Dowds added: “Of course the real test will be if deal processes slow down over the next six months. However, large reserves of undeployed capital and an increasing ‘comfort level’ for US investors operating abroad are two positive factors that should remain in place. By sector, TMT remains the largest by volume in both directions, hence the London-California axis has now overtaken the London-New York one.”

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