Mergers and acquisitions involving UK companies: Jan to Mar 2017

Transactions which result in a change of ultimate control of the target company and have a value of £1 million or more.

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This is an accredited national statistic.

Contact:
Email Sami Hamroush

Release date:
6 June 2017

Next release:
5 September 2017

1. Main points

  • In Quarter 1 (Jan to Mar) 2017, there were 127 successfully completed domestic and cross-border acquisitions and disposals involving UK companies.

  • There were 48 completed domestic acquisitions (UK companies acquiring other UK companies) reported in Quarter 1 2017; the total value of these domestic mergers and acquisitions (M&A) transactions was £3.6 billion, reflecting a fall from the £11.9 billion reported during Quarter 1 2016.

  • There were 40 completed inward M&A transactions (foreign companies acquiring UK companies) in Quarter 1 2017; the value of these inward M&A transactions was £5.1 billion – this was the lowest value recorded since Quarter 4 (Oct to Dec) 2014 and was notably lower than the unusually large value recorded in Quarter 1 2016 (£50.4 billion).

  • During Quarter 1 2017, there were 26 successful acquisitions made abroad by UK companies worth £1.9 billion; the value of these outward M&A transactions was the smallest recorded since Quarter 3 (July to Sept) 2013 and was below the value recorded in Quarter 1 2016 (£8.8 billion).

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2. Things you need to know about this release

This release covers mergers and acquisitions (M&A) transactions that have been successfully completed, result in a change of ultimate control of the target company and have a value of £1 million or more. Information on the number and value of transactions are reported, in addition to whether transactions are acquisitions or disposals.

Figures relating to mergers are included within acquisitions and those relating to demergers are contained within disposals. These statistics are presented on a current price basis, which relates to prices as they were at the time of measurement and are therefore not adjusted for inflation.

The quarterly numbers and value of M&A activity are prone to large quarter-on-quarter movements, as these data relate to specific “one-off” only transactions. For example, one quarter can be heavily impacted by one large transaction. As such, it may be more appropriate to analyse trends over time.

Data published in this bulletin for all 4 quarters of 2016 have been revised in light of new information and represent final estimates for 2016. No further revisions to data prior to Quarter 1 (Jan to Mar) 2016 have been made, therefore time series data for all quarters of 2015 and any previous historic quarterly periods remain unchanged.

Source of data

The information presented in this bulletin is based on reports in the financial press, specialist magazines, company and financial websites. Businesses identified as having engaged in M&A activity are issued statutory surveys to determine the form, value and timing of each transaction.

If the information is not yet in the public domain, such transactions may not be reflected in the analysis. Where full information has not yet been received on the details of the acquisition or disposal, the value of the transaction indicated in the public domain is used as an interim estimate.

The data shown in this release relate solely to mergers and acquisitions undertaken by companies; acquisitions by individuals are not included.

This publication contains data relating to mergers, demergers, acquisitions and disposals. Figures relating to mergers are included within acquisitions and those relating to demergers are contained within disposals.

We make every effort to provide informative commentary on the data in this release. As part of the quality assurance process, individual businesses are contacted in an attempt to discover reasons for large period-on-period data movements. It can prove difficult to gather detailed reasons from some businesses to help inform the commentary. Frequently, reasons given for data movements refer to a “change in market conditions” or a “restructure of the company”. Consequently, it is not possible for all data movements to be fully explained.

We are aware that a number of users make use of these data for modelling or forecasting purposes. In doing so, it is important that users make note of our revisions policy and that all time series are on a “current price” basis, which means that the values are as they were at the time of measurement and not adjusted for inflation. Acquisitions and disposal activity can be affected by UK and global economic and political issues and therefore quarterly estimates can be volatile.

One question often asked of the M&A release is, “why is there a time delay between the announcement of M&A transactions in the press and the inclusion of these transactions within ONS M&A figures?’’ The difference is that ONS M&A figures record when a transaction legally completes as opposed to when the transaction has been announced in the press. The complexities surrounding the acquisitions and disposals taking place often incurs a time lag, which can vary between quarters.

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3. Summary

During Quarter 1 (Jan to Mar) 2017, the provisional estimates for the total number of successful domestic and cross-border mergers and acquisitions (M&A) involving UK companies saw a lower level of activity when compared with Quarter 4 (Oct to Dec) 2016 and also with the same quarter of the previous year, Quarter 1 2016 (Figure 1).

There were a total of 127 successful domestic and cross-border M&A involving UK companies in Quarter 1 2017, valued at approximately £12 billion (these figures exclude inward disposals due to confidentiality). This total includes 48 domestic acquisitions valued at £3.6 billion; 40 inward acquisitions valued at £5.1 billion; 26 outward acquisitions valued at £1.9 billion and 13 outward disposals valued at £1.4 billion.

The total value of successful domestic and cross-border M&A in Quarter 1 2017 was notably lower than the values recorded in 2016; however, as highlighted previously, the value of inward M&A activity recorded in 2016 was unusually high and dominated by a small handful of very-high-value transactions.

Overall, during the first quarter (Jan to Mar) of 2017 and despite quarter-on-quarter M&A volatility, the total number of successful M&A involving UK companies has remained broadly stable since the 2008 to 2009 economic downturn.

Recent M&A statistics can be put into context by comparing the most recent quarter with average quarterly M&A over 5-year intervals since 1997 (Table 1).

Average outward M&A

The quarterly average number of outward acquisitions involving a change in majority share ownership during 1997 to 2001 was reported as 128 completed acquisitions, with an average value of £160 million per transaction. The average number of outward acquisitions fell over the next 10 years, falling to a quarterly average of 67 outward acquisitions, with an average value of £119 million by the end of 2011. Between 2012 and 2016, the average number of outward acquisitions fell further, to a quarterly average of 30 transactions, with the average value per transaction increasing to £141 million.

Overall, during 1997 to 2016 (20-year interval), the average number of outward acquisitions was 76, with an average value of £130 million per transaction.

During Quarter 1 (Jan to Mar) 2017, the average value of the 26 completed outward acquisitions was £72 million.

Average inward M&A

Between 1997 and 2001, the quarterly average number of completed inward acquisitions was 54, with an average value of £182 million per transaction. The following 10 years (2002 to 2011) experienced relatively stable levels of M&A activity. However, between 2012 and 2016, the quarterly average number of inward acquisitions fell to 41, with an average value per transaction of £351 million. The increase in the average value seen during the 2012 through to 2016 period is influenced by a few successful acquisitions valued greater than £1,000 million in 2016.

The 20-year interval (1997 to 2016) saw an average of 49 completed inward acquisitions that involved a change of majority share ownership. The average value of the 49 transactions was shown as £232 million per transaction.

The number of completed inward acquisitions increased to 40 in Quarter 1 (Jan to Mar) 2017 with an average value per transaction of £129 million.

Average domestic M&A

During the 15-year period between 1997 and 2011, the average number of domestic acquisitions involving a change in majority share ownership saw a downward trend. The quarterly average number of domestic M&A for 1997 to 2001 was 136, with an average value of £81 million. During 2002 to 2006, domestic M&A saw an increase in the quarterly average number of transactions (164); however, the quarterly average value per transaction fell to £39 million. The following 5-year interval (2007 to 2011) saw the average quarterly number of domestic M&A fall to 121, with an average value per transaction of £40 million. During the 5-year interval 2012 to 2016, the average value of the 68 completed domestic acquisitions was £37 million.

Overall, 119 completed domestic acquisitions involving a change of majority share ownership took place between 1997 and 2016.

In Quarter 1 (Jan to Mar) 2017, there were 48 successful domestic acquisitions, with an average value of approximately £75 million per transaction.

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4. Transactions in the UK by other UK companies

The value of domestic M&A increased when compared with the previous quarter

During Quarter 1 (Jan to Mar) 2017, the number of successful mergers and acquisitions (M&A) of UK companies by other UK companies (domestic M&A) saw a decrease when compared with the previous quarter, but an increase in value (Figure 2).

There were 48 completed domestic M&A during Quarter 1 2017, a decrease compared with 90 acquisitions reported in Quarter 4 (Oct to Dec) 2016. There was also a decline when comparing the number of transactions in Quarter 1 2017 to the same quarter in 2016, when 93 transactions took place.

In contrast, the value of domestic M&A transactions in Quarter 1 2017 saw a quarter-on-quarter increase, reporting a value of £3.6 billion, up from the £2.5 billion in Quarter 4 2016. However, the value reported in Quarter 1 2017 was lower than that recorded in the same quarter of 2016 (£11.9 billion).

The total number of domestic M&A can be split into those made by independently- controlled companies and those which are subsidiaries. The acquisition of an independent company means the purchase of a company in its entirety, whereas the acquisition of a subsidiary means the acquisition of a part of a company, between 50.1% to 100% ordinary share ownership.

During Quarter 1 2017, there were 40 acquisitions of UK independently-controlled companies worth £3.1 billion and eight acquisitions worth £0.5 billion involving subsidiaries between UK company groups (Figure 3).

Notable successful domestic acquisitions which completed during Quarter 1 (Jan to Mar) 2017:

Siccar Point Energy Limited of the UK acquired OMV (UK) Ltd of the UK

The British United Provident Association of the UK acquired Oasis Dental Care of the UK

Drax Group Plc of the UK acquired Opus Energy Group Ltd of the UK

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5. Transactions in the UK by foreign companies

Inward M&A activity saw a notable fall in both value and number compared with those achieved in 2016

Provisional results for the number of mergers and acquisitions (M&A) of UK companies by foreign companies in Quarter 1 (Jan to Mar) 2017 saw a decline in both number and value compared with the high levels seen during the 4 quarters of 2016 (Figure 4).

There were 40 completed inward M&A of UK companies during Quarter 1 2017, which was 36 fewer than reported during Quarter 4 (Oct to Dec) 2016 (76) and 18 fewer than reported during Quarter 1 2016. The number of inward M&A in Quarter 1 2017 was the lowest reported since Quarter 3 (July to Sept) 2015 (37).

The value of inward M&A also decreased during Quarter 1 2017 when compared with the previous quarter, at £5.1 billion. This decrease is explained by a number of very-high-valued M&A deals previously reported on in 2016, which are absent in the first quarter of 2017. Nevertheless, it is notable that the value of activity recorded in Quarter 1 2017 is the lowest seen since Quarter 4 2014 (£3.9 billion).

Notable inward transactions, which completed during Quarter 1 (Jan to Mar) 2017:

Onex Corporation of Canada acquired Parkdean Resorts Topco Ltd of the UK

Teledyne Technologies Inc of the USA acquired E2V Technologies of the UK

CCL Syrinix Inc of Canada acquired Innovia Group of the UK

Loxam SAS of France acquired Lavendon Group Plc of the UK

Intas Pharmaceuticals Ltd of India acquired Actavis UK Ltd of the UK

The provisional quarterly estimates for the number and value of disposals of UK companies by foreign companies during Quarter 1 (Jan to Mar) 2017 have been suppressed in this bulletin to avoid any potential disclosure in this type of M&A activity.

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6. Transactions abroad by UK companies

The value of outward M&A fell compared with those reported in the previous quarter

At Quarter 1 (Jan to Mar) 2017, the provisional estimates for mergers and acquisitions (M&A) of foreign companies by UK companies (outward M&A), involving a change of majority ownership, saw a small increase in the number of successful transactions but a fall in value (Figure 5).

The number of outward M&A made by UK companies involving a change of majority ownership in Quarter 1 2017 was 26, an increase of four transactions on Quarter 4 (Oct to Dec) 2016 but a decrease of 12 compared with Quarter 1 2016.

Despite the small increase seen in the number of M&A abroad during Quarter 1 2017, the value of outward M&A fell to £1.9 billion, down from £3.4 billion in Quarter 4 2016. The decline in the value of activity in Quarter 1 2017 was even larger when compared with the £8.8 billion recorded in Quarter 1 2016.

In Quarter 1 2017, there were 13 completed outward disposals with a total value of £1.4 billion.

Notable successful outward acquisitions which completed during Quarter 1 (Jan to Mar) 2017:

RPC Group Plc of the UK acquired Letica Corporation of the USA

Old Mutual Plc of the UK disposed of Old Mutual Wealth Italy

Man Group Plc of the UK acquired Aalto Invest Holding AG of Switzerland

Ascential Group Ltd of the UK acquired MediaLink of the USA

Smiths Group Plc of the UK disposed of Power Distribution Inc of the USA

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7. Mergers and acquisitions that will feature in future releases

The mergers and acquisitions (M&A) data and information in this release only include data for acquisitions, mergers and disposals that are successfully and legally completed. As part of the production process we also identify announced and agreed M&A transactions.

The following notable M&A transactions will feature in future releases once completed:

  • Post Holdings Inc of the USA to acquire Weetabix Ltd of the UK
  • Bright Foods Group Co Ltd of China to dispose of Weetabix Ltd of the UK
  • GoDaddy Inc of the USA acquiring Host Europe Group Limited of the UK
  • Aviva Plc of the UK disposing of Antarius SA of France
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8. How our statistics compare with external evidence

Global mergers, acquisitions and disposals activity is often driven by the availability of credit and company profits, as well as a sense of confidence in the economic outlook. The majority of large mergers and acquisitions (M&A) transactions involve some element of borrowing or leveraging. Therefore when credit conditions deteriorate, as happened in the 2008 to 2009 economic downturn, M&A activity declines. On the other hand, the process of completing an M&A transaction takes time and sometimes there is a lag between improving economic conditions and any quarter-on-quarter increase in M&A activity.

The Agents’ Summary Of Business Conditions Report for Quarter 1 (Jan to Mar) 2017, produced by the Bank of England, reported that, “banks were said to be reluctant to fund management buyouts by smaller firms. Funding choices were reported to be more limited for some groups, including smaller developers and construction companies. Challenger banks were increasingly active in these sectors. Non-bank finance, such as peer-to-peer funding, had become a major part of some small and medium-sized enterprises’ (SMEs’) funding. Private equity firms and debt funds had continued to provide funds for larger corporate finance deals”.

The Office for Budget Responsibility reported in its Economic and Fiscal Outlook report (March 2017), “that bank lending to businesses grew by 3.6 per cent in the year to December 2016. While growth in lending to large businesses increased, growth in lending to small and medium-sized enterprises (SMEs) slowed from 2.1 per cent in September to 1.6 per cent in December. According to the Bank of England’s latest Credit Conditions Survey, credit demand from SMEs fell significantly in the third and fourth quarters, despite unchanged availability”.

Experian, a global information services company, stated in its United Kingdom and Republic of Ireland M&A Review for Quarter 1 2017 that: "After a busy 2016, characterised by increasing volumes in the SME space and robust growth across a range of sectors, the first quarter of 2017 presents more of a mixed picture in terms of UK M&A. While the subdued volume figures suggest that deal makers have been content to largely hold their fire in Q1, some British Plcs have belied the wait and see approach and pushed ahead with ambitious plans for growth by acquisition, and a number of big ticket acquisitions mean that overall value figures still compare favorably to the first quarter of last year”.

Bureau Van Dijk – a leading provider of private company, corporate ownership and deal information – stated in its Quarterly M&A Review Report, Global Quarter 1 2017, “that the volume and value of global mergers and acquisitions (M&A) declined in the first quarter of 2017 on both Q4 2016 and Q1 2016”.

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9. Data revisions

Data for all 4 quarters of 2016 have been revised in the light of new information and so revisions to the data for Quarter 1 (Jan to Mar), Quarter 2 (Apr to June), Quarter 3 (July to Sept) and Quarter 4 (Oct to Dec) have been published in this statistical bulletin. No further revisions to data prior to Quarter 1 2016 have been made. Therefore time series data for all quarters of 2015 and any previous historic quarterly periods remain unchanged.

Annual data tables for 2016 are produced in conjunction with the Quarter 4 2016 and Quarter 1 2017 data outputs. Revisions to the 2016 quarterly and annual figures were recalculated at Quarter 1 2017 only. Therefore no revisions to annual data prior to 2016 have been made and subsequently time series data for previous historic annual periods remains unchanged.

Revisions to the aggregates used in M&A principally occur for the following reasons.

Analysing average revisions between provisional and final estimates can provide an indication of reliability in an initial statistic. Provisional statistics may be based on less information than is available for final statistics as they have been processed more quickly to meet the demand of customers. By looking at these average revisions it can help us determine whether revisions are being made consistently in one direction if early estimates are consistently under- or over-estimating the later figures. A test is subsequently performed on these average revisions to determine if they are statistically different from zero. Revisions that are not statistically significant imply that an average revision might be non-zero simply through random effects.

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10. Response rates

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11. Quality and methodology

The Mergers and acquisitions Quality and Methodology Information document contains important information on:

  • the strengths and limitations of the data and how it compares with related data
  • users and uses of the data
  • how the output was created
  • the quality of the output including the accuracy of the data
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12. Background notes

The Cross-Borders Acquisitions and Mergers Survey (M&A) data are used in the compilation of the estimates of foreign direct investment (FDI). These data meet the needs of FDI by collecting data on all acquisitions that lead to a holding in excess of 10% of the issued share capital. The M&A estimates feed into the UK Balance of Payments and Financial Accounts, for which there is an EU legal requirement. Individual transaction information is also used to estimate the counterpart in “portfolio” investment flows for monthly balance of payments.

The data collected are also used in updating business structures and country of ownership codes on the Inter-Departmental Business Register (IDBR).The IDBR is a comprehensive list of UK businesses that is used by government for statistical purposes.

Feedback from users has indicated that the information received from the M&A survey has a high degree of relevance across user groups, meets the vast majority of user needs and all information currently collected and published is used.

  1. Significant transactions

    Significant transactions tables show the reported figures for a selection of significant transactions that occurred in the quarter, where “significance” is defined as the absolute value of the deal.

    The information shown is taken from each relevant company’s press release, which is available within the public domain. A direct link to each press release is provided. Should a company request that details of the transaction be kept confidential then the deal is excluded. However, the values are included in the aggregate tables. Occasionally, therefore, a large deal may be missing (suppressed) from the lists so it is best to regard these tables as an indication of the ranking of deals rather than a completely exhaustive listing.

    Press-reported figures for M&A transactions often differ to some extent from those supplied by companies to ONS and it is the latter that are used in compiling statistical aggregates in dataset Tables 1 to 10. Included in the prices quoted in the tables of significant transactions is the total published price paid for the company excluding any assumed debt where known. Deferred payments are included in the reported price even if the payment is made in a different quarter.

  2. Definition of M&A transactions

    Mergers are acquisitions in which all or part of the payment is made in shares, such that the shareholders of the two companies become shareholders of a new, combined company group.

    Demergers are disposals where a company group divides into two or more separate companies, in such a way that the shareholders of the restructured companies remain the same, or retain the equivalent value shareholding in one of the newly independent companies. Demergers are included in the statistics within disposals.

    Acquisitions are transactions that involve one company purchasing the ordinary shares of a second company (“target company”). A target company is usually of a smaller size than the company undertaking the purchase.

    Disposal is a term used to describe the action when a company or organisation sells or liquidates the ordinary shares of a second company (“target company”).

    Cross-border acquisitions denote transactions where a company in one country acquires, either directly or indirectly, a controlling interest in a company in another country.

    Direct transactions are those where a company acquires a controlling interest in another company.

    Indirect transactions are those where a company uses an existing foreign subsidiary to acquire a controlling interest in a company resident in another country. The acquiring foreign intermediate company may be located in the same country in which the acquisition is being made or in a different country.

    Acquisitions within the UK by other UK companies denote mergers and acquisitions involving only UK- registered companies.

    Where the acquired company was a subsidiary of another company the transaction is classified as a sale between company groups.

    The phrase “acquisitions in the UK by UK companies” refer to deals where the ultimate ownership remains in the UK. This heading does not cover the total number or value of deals where a UK company is the acquirer. When a foreign company acquires a UK company through one of its existing UK subsidiaries or a UK-registered special purpose vehicle, that deal is shown as part of the data under “acquisitions in the UK by foreign companies”.

    Acquisition of independent companies

    The acquisition of an independent company means the purchase of a company in its entirety – the company itself and all of its subsidiaries.

    Acquisition of subsidiary companies

    The acquisition of a subsidiary company means the purchase of part of a company.

  3. Financing

    This statistical bulletin provides details of the application of funds to affect mergers and acquisitions and the proceeds raised from disinvestments and demergers.

    For indirect foreign transactions there is the added complication of considering the movements of funds either as capital injection or in the form of loans between parent companies and their foreign subsidiaries making the acquisition. Occasionally, the foreign subsidiary obtains the funds required partly or entirely outside the UK from sources such as:

    • own resources
    • borrowing from banks and other local sources
    • share, bond and other capital or notes issued abroad

    Also, a transaction may be funded by more than one method.

  4. Definitions of geographic and economic areas

  5. Disclosure

    It is sometimes necessary to suppress figures for certain items in order to avoid disclosing information about an individual business. Further information on why data are suppressed is available in the ONS Disclosure Control Policy.

  6. Discussing ONS business statistics online

    There is a Business and Trade Statistics community on the StatsUserNet website. StatsUserNet is the Royal Statistical Society’s interactive site for users of official statistics. The community objectives are to promote dialogue and share information between users and producers of official business and trade statistics about the structure, content and performance of businesses within the UK. Anyone can join the discussions by registering via either of the links.

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Contact details for this Statistical bulletin

Sami Hamroush
sami.hamroush@ons.gov.uk
Telephone: +44 (0)1633 455087

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