M&A activity prompts further flurry of delistings from London's Aim market

LONDON's junior stock market saw the flood gates reopen in the final quarter of last year as the number of companies delisting rose almost 16 per cent, new research from law firm Trowers & Hamlins and accountancy firm UHY Hacker Young has shown.

The unexpected jump in firms leaving the Aim market up to 73 companies in the final three months of 2009 compared to 63 in the third quarter comes after a gradual fall in the number of delistings throughout the first three quarters of the year.

However, the research also shows the primary reason for delistings is now takeover activity, which caused 23 exits in the fourth quarter of 2009.

Twenty-two companies had to delist during the quarter because of insolvency or financial stress down from 27 in the third quarter of 2009 but still over double the nine firms quitting the market a year earlier.

Charles Wilson, a partner at Trowers & Hamlins, said the increase in delistings was not wholly bad news for Aim because of the increase in takeover activity. "Some of the more recent takeovers of Aim companies have been launched by management or by majority shareholders [and] it is a positive sign when insiders are willing to initiate takeovers of Aim companies they are involved in," he said.

But Laurence Sacker, a partner at UHY Hacker Young, cautioned that the market is not out of the woods yet, adding: "There are still a lot of walking wounded out there."