Tuesday 1 October 2019 12:01 am

UK outbound M&A plunges to lowest level in a decade

The value of UK outbound merger and acquisition (M&A) activity plunged in the third quarter, sinking to its lowest level in the last decade.

M&A deals have totalled $42.9bn (£35bn) so far this year, down 69 per cent on the same time last year, according to data from Refinitiv.

Read more: M&A activity targeting UK slumps amid no-deal Brexit fears

Despite the large drop in value, the number of deals has fallen only five per cent.

The US is the most popular destination for outbound investment by UK companies, with acquisitions into the US accounting for 34 per cent of outbound activity by value. Canada and Germany account for 10 per cent and nine per cent respectively.

The combined value of UK domestic deals has hit $67.6bn so far this year, marking the second highest year-to-date total in the last decade.

However, domestic M&A has declined five per cent from last year by value and is down 17 per cent by number of deals.

The impact of political and economic uncertainty has also been felt for inbound M&A, as deals involving a UK target and foreign buyer fell 11 per cent to $110.5bn. The slip came despite the impact of Hong Kong’s bumper £32bn offer for the London Stock Exchange.

A total of 23 deals involving a UK target and valued at $1bn or more have been announced so far this year, compared to 30 at this time last year.

Read more: Value of deals from foreign buyers climbs despite dip in outward M&A

“Despite an 11 per cent decline in inbound M&A activity from last year, it should be noted that the UK is the second most targeted country for cross border M&A in the world, a position it has held every year since 2014,” said Refinitiv analyst Lucille Jones.

“While UK companies appear to be attractive takeover targets, M&A involving a UK buyer has declined. With uncertainties linked to Brexit, global trade disputes, and geopolitical tensions weighing on their minds this year, it is not surprising that UK chief executives and boards are exercising caution.”

Main image credit: Getty