Mergers and acquisitions involving UK companies: October to December 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:
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Release date:
6 March 2018

Next release:
5 June 2018

1. Main points

  • The provisional estimates for the total value of successful domestic and cross- border mergers and acquisitions (M&A) involving UK companies during Quarter 4 (Oct to Dec) 2017 fell compared with both Quarter 3 (July to Sept) 2017 and the same quarter of the previous year (Quarter 4 2016).

  • Outward M&A (UK companies acquiring foreign companies) was the main driver for the total value of M&A activity during 2017 (Jan to Dec), with the value reaching a 17-year high of £76.6 billion; the value in 2017 was dominated by the completion of two high-value deals: the acquisition of Mead Johnson Nutrition Company and Reynolds America.

  • The value of inward M&A (foreign companies acquiring UK companies) was £35.3 billion in 2017, a sizeable decrease compared with the value recorded in 2016, but higher than values recorded between 2011 and 2015.

  • Domestic M&A (UK companies acquiring other UK companies) was worth £18.6 billion for the whole of 2017, a slight decrease on the total value recorded during the previous year (2016) although higher than values recorded between 2009 and 2015.

A short article has been published alongside this release to provide additional context for the inward and outward M&A that completed during 2016 and 2017.

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2. Your views matter

We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have and would be particularly interested in knowing how you make use of these data to inform our work. Please contact us via email: ma@ons.gov.uk or telephone Sami Hamroush on +44 (0)1633 455087.

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3. Uses of mergers and acquisitions data

The estimates produced for mergers and acquisitions (M&A) are important components of foreign direct investment flows data (inward and outward), which is used to calculate the UK Balance of Payments published in the Pink Book and Blue Book.

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4. 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 they 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. Therefore, it can be more appropriate to analyse trends over time.

Office for National Statistics (ONS) has recently undertaken a review of the data sources used for identifying completed M&A transactions and creating the sampling frame for mergers and acquisitions (M&A) involving UK companies. Since 1 February 2018, ONS has replaced the use of multiple online public sources to use instead one comprehensive commercial data source (provided by Bureau Van Dijk) for identifying completed and successful M&A transactions.

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5. Summary

During Quarter 4 (Oct to Dec) 2017, the total value of successful domestic and cross-border mergers and acquisitions (M&A) involving UK companies was £13.0 billion, a sizeable decrease when compared with Quarter 3 (July to Sept) 2017 (£74.0 billion) and with the same quarter of the previous year (Quarter 4 2016) (£91.1 billion).

Outward M&A was £4.2 billion in Quarter 4 2017, a notable fall compared with the spike seen in Quarter 3 2017 (£51.0 billion), but also the highest Quarter 4 figure recorded since Quarter 4 2014 (£11.8 billion). Overall in 2017, the total value of outward M&A transactions involving UK companies reached £76.6 billion, the highest value recorded since 2000 .

Inward M&A fell to £3.7 billion in Quarter 4 2017, compared with £17.4 billion in Quarter 3 2017 and was the lowest value recorded for the same quarter since Quarter 4 2013 (2.0 billion). Overall in 2017, inward M&A saw a notable decline in value when compared with 2016, falling from £190.0 billion to £35.3 billion.

The dramatic movements for the values of both outward and inward M&A between 2016 and 2017 can be explained by a handful of high-value transactions, which dominated headline statistics. More detail on the contributions of these transactions can be found in a short article published alongside this bulletin.

Domestic M&A fell slightly to £5.1 billion in Quarter 4 2017, compared with £5.4 billion in Quarter 3 2017; however, the value was the highest recorded for the same quarter since Quarter 4 2010 (£6.3 billion). The overall value of domestic M&A in 2017 was £18.6 billion, compared with £24.7 billion in 2016; although the value recorded in 2017 was higher than those recorded between 2009 and 2015.

Recent M&A statistics can be put into context by comparing the M&A activity involving UK companies over consecutive five-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 £160.0 million per transaction. The average number of outward acquisitions fell over the next 10 years, to a quarterly average of 67 outward acquisitions, with an average value of £119 million during the period between 2007 and 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 £143.3 million.

During 1997 to 2016 (a 20-year interval), the average number of outward acquisitions was 76, with an average value of £126.5 million per transaction.

The average value of outward acquisitions during 2017 (£510.6 million per transaction) was explained by the completion of a small number of acquisitions with values above £10.0 billion.

Average inward M&A

Between 1997 and 2001, the quarterly average number of completed inward acquisitions was 54, with an average value of £182.3 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 £351.2 million. The increase in the average value seen during the 2012 to 2016 period was 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 these 49 transactions was £231.6 million per transaction.

There were 254 completed inward acquisitions in 2017 (Jan to Dec) with an average value per transaction of £138.9 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 £80.5 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 £39.4 million. The following five-year interval (2007 to 2011) saw the average quarterly number of domestic M&A fall to 121, with an average value per transaction of £39.9 million. Then during 2012 to 2016, the average value of the 68 completed domestic acquisitions was £37.1 million.

Between 1997 and 2016, the average value of domestic M&A per transaction was recorded as £50.6 million.

During 2017, the 361 successful acquisitions of UK companies made by other UK companies recorded an average value of £51.6 million per transaction.

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6. Transactions abroad by UK companies (Quarter 4 2017)

Outward mergers and acquisitions (M&A) activity saw a fall in value compared with the previous quarter

During Quarter 4 (Oct to Dec) 2017, the estimated value of successful outward M&A was £4.2 billion compared with £51.2 billion reported in the previous quarter (July to Sept), reflecting a quarter-on-quarter decrease of £47.0 billion. This decrease can be largely explained by a few high-value transactions that had completed in previous quarters and deals of a similar value were absent from Quarter 4 2017.

There were 24 successful acquisitions of foreign companies abroad made by UK companies in Quarter 4 2017 involving a change of majority share ownership; a fall compared with the 45 reported for Quarter 3 (July to Sept) 2017 but similar to the 22 recorded in the same quarter of the previous year, Quarter 4 2016 (Figure 2).

Notable outward transactions, valued at £100 million or more, that took place during Quarter 4 2017:

Spectris Plc of the UK disposed of Microscan Systems of the USA.

Dialog Semiconductor Plc of the UK acquired Silego Technology Inc of the USA.

RWS Holdings Plc of the UK acquired Moravia US Holding Company Inc of the USA.

Bunzl Plc of the UK acquired Hedis SAS of France.

Victoria Plc of the UK acquired Keraben Grupo S.A. of Spain.

Ensco Plc of the UK acquired Atwood Oceanics Inc of Spain.

There were six outward disposals made abroad by UK companies involving a change of majority share ownership and worth £0.3 billion during Quarter 4 2017, compared with 11 outward disposals valued at £6.4 billion in Quarter 3 2017.

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7. Transactions abroad by UK companies (Jan to Dec 2017)

Outward M&A saw sizeable increases in the value and number – reaching a 17-year high

Successful outward mergers and acquisitions (M&A) activity experienced a notable upturn during 2017, recording increases in both the value and number of acquisitions involving a change of majority share ownership.

The total value of completed acquisitions made abroad by UK companies for the whole of 2017 was £76.6 billion, which was the largest recorded value for outward M&A since 2000 (£181.0 billion).

Year-on-year comparison shows that the value of completed outward M&A between 2016 (£17.9 billion) and 2017 (£76.6 billion) has risen sharply. This can be explained by two significantly-valued outward acquisitions that successfully completed in Quarter 2 (Apr to June) 2017 and Quarter 3 (July to Sept) 2017:

Reckitt Benckiser Group Plc (UK) acquired Mead Johnson Nutrition Company (USA).

British American Tobacco Plc (UK) acquired Reynolds Inc American (USA).

There were 150 successful outward M&A transactions for 2017, a slight increase on the 141 acquisitions recorded in 2016 and lower than the 170 successful acquisitions recorded in 2015 (Figure 3).

Overall, during 2017 the value of outward disposal transactions decreased albeit that the number of disposals saw a slight increase. There were 48 outward disposals valued at £10.1 billion that completed in 2017 compared with 42 outward disposals worth £15.4 billion recorded in the previous year (2016).

Other notable outward transactions, valued at £100 million or more, that took place during 2017:

Quarter 1 2017:

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

John Menzies Plc of the UK acquired Aircraft Service International Group of the USA.

BBA Aviation Plc of the UK disposed of Aircraft Service International Group of the USA.

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

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

Ascential Group Ltd of the UK acquired MediaLink of the USA.

Essentra Plc of the UK disposed of Essentra Porous Technologies Corp of the USA.

3i Group Plc of the UK disposed of 3i debt Management business of the USA.

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

Quarter 2 2017:

Chesnara Plc of the UK acquired Legal & General Nederland Levensverzekering Maatschappij NV of the Netherlands.

Legal & General Group Plc of the UK disposed of Legal & General Nederland of the Netherlands.

Ashtead Group Plc of the UK acquired Pride Equipment Corporation of the USA.

Smiths Group Plc of the UK acquired Morpho Detection LLC and Morpho Detection Int LLC.

Spirax-Sarco Engineering Plc of the UK acquired Gestra AG of Germany.

Electra Private Equity Plc of the UK disposed of RISI of the USA.

Rentokil Initial Plc of the UK disposed of Rentokil Initial Business of Luxembourg.

Hotelbeds Group of the UK acquired Tourico Holidays of the USA.

Quarter 3 2017:

Reckitt Benckiser Group Plc of the UK disposed of The French's Food Company LLC of the USA.

Spirax-sarco Engineering Plc of the UK acquired Chromalox Inc of the USA.

The Sage Group Plc of the UK disposed of Sage Payment Solutions Inc of the USA.

The Sage Group Plc of the UK acquired Intacct Corporation of the USA.

Ashtead Group Plc of the UK acquired CRS Contractors Rental Supply of Canada.

Micro Focus International Plc of the UK acquired HP Enterprise Software the USA.

DS Smith Plc of the UK acquired Indevco Management Resources Inc of the USA.

Schroders Plc of the UK acquired Schroder Adveq Holding AQ of Switzerland.

Animalcare Group Plc of the UK acquired Ecuphar NV of Belgium.

Rio Tinto Plc of the UK disposed of Coal & Allied Industries Limited of Australia.

Zegona Communications Plc of the UK disposed of Parselaya S.L.U of Spain.

Diageo Plc of the UK acquired Casamigos Tequila LLC of the USA.

During 2017, the number of successful outward M&A acquisitions (150) reported was broadly in line with the number reported in 2016 (141); the Americas (63) and Europe (69) were two continents that showed increases in M&A activity year-on-year, of 17% and 11% respectively (Figure 4). The value of outward acquisitions saw a considerable increase between 2016 and 2017 of £52.9 billion. Much of this increase was seen in the Americas with £71.2 billion recorded during 2017 compared with £13.3 billion in 2016.

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8. Transactions in the UK by foreign companies (Quarter 4 2017)

Inward M&A has seen a decline in the value and number of successful transactions

During Quarter 4 (Oct to Dec) 2017, the provisional estimates for the mergers and acquisitions (M&A) of UK companies made by foreign companies (inward M&A) involving a change of majority share ownership recorded a notable decrease in value when compared with Quarter 3 (July to Sept) 2017.

The value of successful inward acquisitions during Quarter 4 2017 was recorded as £3.7 billion, a fall of £13.7 billion on the value previously seen in Quarter 3 2017 (£17.4 billion). This quarter-on-quarter decrease can be explained largely by the absence of inward M&A transactions during Quarter 4 2017 with values greater than £10 billion, whereas the values for Quarter 4 2016 were affected by AB InBev’s (Belgium) acquisition of SABMiller (UK) (Figure 5).

The following inward transactions, valued at £100 million or more, took place during Quarter 4 2017:

Michael Kors Holdings Limited of the British Virgin Islands acquired Jimmy Choo (Holdings) Limited of the UK.

Axis Capital Holdings Ltd of Bermuda acquired Novae Group Plc of the UK.

Agnaten SE of Austria disposed of Jimmy Choo (Holdings) Limited of the UK.

Canyon Bridge Capital Partners LLC of the USA acquired Imagination Technologies Group Plc of the UK.

There were seven completed inward disposals worth £1.0 billion during Quarter 4 2017, which was similar to the number and value reported in Quarter 1 (Jan to Mar) 2015 (seven disposals valued at £0.8 billion).

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9. Transactions in the UK by foreign companies (Jan to Dec 2017)

Inward M&A decreased in value when compared with previous years

During 2017, estimates for the value and number of successful acquisitions of UK companies by foreign companies, inward mergers and acquisitions (M&A), saw a sizeable decrease in total value but only a slight decrease in the total number of deals.

The value of successful inward M&A fell sharply in 2017, recording a total of £35.3 billion. This value although similar to the value recorded during 2015 (£33.3 billion), saw a sizeable fall on the total value previously recorded in 2016, of £190.0 billion. While inward M&A figures have historically been volatile, the 2016 value was exceptional and was the highest value recorded since Office for National Statistics records began in 1989; this was explained by the completion of a small number of acquisitions with values greater than £10.0 billion that completed and which were not evident in 2017.

The comparison of annual trends for inward M&A shows that the provisional number of completed UK acquisitions in 2017 (254) was similar to that seen during 2008 and 2016 when the total numbers of acquisitions were 252 and 262 respectively. Since 1988, inward M&A activity increased steadily until reaching a peak in 1993 before then seeing a flat trend developing even though the amount of activity has been volatile (Figure 6).

Other inward notable transactions, valued at £100 million, which took place during 2017:

Quarter 1 2017:

Aegon NV of the Netherlands acquired Cofunds Holdings Ltd of the UK.

Solera Holdings Inc of the USA acquired Autodata Limited of the UK.

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

Loxam SAS of France acquired Lavendon Group Plc of the UK.

Advent International Corporation of the USA acquired Brammer Plc of the UK.

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

Astrog Partners of France acquired Audiotronix of the UK.

CCLSyrinix Inc of Canada acquired Innovia Group of the UK.

Investcorp Bank BSC of Bahrain acquired 3i Debt Management Business of the UK.

Kohler Co of the USA acquired Clarke Energy Topco Ltd of the UK.

Sumitomo Rubber Industries Ltd of Japan acquired Micheldever Group Limited of the UK.

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

Quarter 2 2017:

Engie of France acquired Regeneration Arm of KeepMoat Homes Ltd of the UK.

Expedia Inc of the USA acquired Silverrail Technologies UK Limited of the UK.

DCC Plc of Ireland disposed of DCC Environmental Britain Limited of the UK.

Bank of America Corporation of the USA disposed of MBNA Limited of the UK.

Tata Steel Ltd of India disposed of Speciaility Steel UK Ltd of the UK.

Liberty Hall Capital Partners of the USA acquired Dunlop Aircraft Tyres Ltd of the UK.

Liberty House Group PTE Ltd of Singapore acquired Speciality Steel UK Ltd of the UK.

CK Hutchison Holding of Hong Kong acquired Transvision Investments Ltd of the UK.

PCCW Ltd of Hong Kong disposed of Transvision Investments Ltd of the UK.

AAC Capital Nebo Sub LP of Guernsey disposed of Dunlop Aircraft Tyres Ltd of the UK.

Sumitomo Rubber Industries Ltd of Japan acquired Dunlop International 1902 limited of the UK.

Tabasco B.V. of the Netherlands disposed of Exova Group Plc of the UK.

The Blackstone Group L.P. of the USA acquired The Office Group Holdings Ltd of the UK.

MSIP International Holdings of the Netherlands disposed of Affinity Water of the UK.

Mastercard Inc of the USA acquired Vocalink Holdings Ltd of the UK.

Quarter 3 2017:

Uni-Select Inc of Canada acquired PA Topco Limited of the UK.

Patron Capital V LP of Jersey acquired Punch Taverns Plc of the UK.

Bright Food Group Co Ltd of China disposed of Weetabix Plc of the UK.

Post Holdings Inc of the USA acquired Weetabix Plc of the UK.

Hunter Douglas NV of the Netherlands acquired Bellotto Holdings Ltd (Hillarys Blinds) of the UK.

Ares Capital Corporation of the USA disposed of Bellotto Holdings Ltd (Hillary’s Blinds) of the UK.

Groupe SNC-Lavalin Inc of Canada acquired WS Atkins Plc of the UK.

BC Partners Holdings Ltd of Guernsey acquired Shawbrook Group Plc of the UK.

The Priceline Group Inc of the USA acquired Momondo Group Holdings Limited of the UK.

B & M European Value Retail SA of Luxembourg acquired Heron Foods Ltd of the UK.

Park24 Co Ltd of Japan acquired MEIF II CP Holdings 2 Limited of the UK.

Partner Group Holding AG of Switzerland acquired Key Retirement Solutions Ltd of the UK.

The Blackstone Group L.P. of the USA acquired Clarion Events Ltd of the UK.

Elis SA of France acquired Berendsen Plc of the UK.

Verisk Analytics Inc of the USA acquired Sequel Equity Co Limited of the UK.

General Motors Company of the USA disposed of G M Automotive UK of the UK.

Natura Cosmeticos S/A of Brazil acquired The Body Shop International Plc of the UK.

L'Oreal of France disposed of The Body Shop International Plc of the UK.

Letterdone Investment Holdings S.A. of Luxembourg acquired Holland & Barrett International Limited of the UK.

Peugeot SA of France acquired G M Automotive UK of the UK.

Laboratory Corporation of America Holdings of the USA acquired Chiltern International Group Ltd of the UK.

Galaxy Limited Partnership of Jersey disposed of Chiltern International Group Limited of the UK.

Lawrence Classics LLC of the USA acquired Rapha Racing Ltd of the UK.

HDI Haftpflichtverband der Deutschen Industries V.A.G. of Germany acquired Argenta Holdings Limited of the UK.

KKR European Fund IV LP of the Cayman Islands acquired A-Gas (ORB) Ltd of the UK.

Providence Equity Partners VII Fund of the Cayman Islands disposed of PSPA Topco Ltd/Clarion Events Ltd of the UK.

The Carlyle Group LP of Luxembourg disposed of Holland and Barrett International Limited of the UK.

During 2017, the value of successful inward disposal transactions saw increases in both value and number when compared with 2016. There were 56 inward disposals that completed during 2017, worth £13.5 billion, compared with 35 disposals worth £6.1 billion during 2016. The value of disposals in 2017 was the highest recorded since 2006 (£14.2 billion).

The majority of both the number and value of the 254 inward M&A transactions worth £35.3 billion in 2017 came from Europe (102 acquisitions valued at £15.0 billion) and the Americas (113 acquisitions valued at £15.0 billion) (Figure 7).

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10. Transactions in the UK by other UK companies (Quarter 4 2017)

Recent pick-up in domestic M&A activity continues, although sees a slight fall relative to previous quarter

During the fourth quarter (Oct to Dec) of 2017, UK companies spent £5.1 billion on acquisitions of other UK companies, a similar value to the £5.3 billion reported in Quarter 3 (July to Sept) 2017. Comparing the value of domestic M&A transactions in Quarter 4 2017 with the same quarter in previous years highlights that this was the highest Quarter 4 figure recorded since Quarter 4 2010 (£6.3 billion).

In comparison, the provisional estimates for the number of domestic acquisitions during Quarter 4 2017 (47) saw a notable decline compared with Quarter 3 2017 and Quarter 4 2016, when the numbers of successful acquisitions recorded were 102 and 90 respectively (Figure 8).

The following domestic acquisitions, valued at £100 million or more, took place during Quarter 4 2017:

Zoopla Property Group Plc of the UK acquired Dot Zinc Ltd of the UK.

John Wood Group Plc of the UK acquired Amec Foster Wheeler Plc of the UK.

Bridgepoint Group Limited of the UK acquired The Miller Group (UK) Limited of the UK.

Clinigen Group Plc of the UK acquired Quantum Pharma Plc of the UK.

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11. Transactions in the UK by other UK companies (Jan to Dec 2017)

Domestic M&A has seen falls in both value and number of acquisitions

The total value of successful domestic acquisitions for 2017 was £18.6 billion (Figure 9), with a combined total £10.4 billion being reported between Quarter 3 (July to Sept) and Quarter 4 (Oct to Dec) 2017. The total value of domestic M&A for 2017 (£18.6 billion) was £6.1 billion lower than the value reported in 2016 (£24.6 billion).

During 2017, there were 361 successful domestic acquisitions, reflecting a 15% decrease on the number previously reported in 2016 (428).

It is possible to split the number of domestic M&A into those made by independently-controlled companies and those that are by subsidiaries. The acquisition of an independent company means the purchase of a company in its entirety, whereas the acquisition of a subsidiary means the purchase of only a part of the company, between 50.01% and 100%.

During 2017, there were 320 domestic acquisitions of UK independently-controlled companies worth £15.3 billion, compared with 383 acquisitions valued at £11.0 billion recorded in 2016 (Figure 10). In comparison, the number of acquisitions for domestic subsidiaries in 2017 decreased to 41 successful transactions worth £3.3 billion in 2017, down from 45 transactions worth £13.6 billion in 2016.

Other notable domestic acquisitions, valued at £100 million that took place during 2017:

Quarter 1 2017:

British United Provident Association Ltd of the UK acquired The Oasis Healthcare Group Ltd of the UK.

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

London & Quadrant Housing Trust Ltd of the UK acquired Gallagher Estates Holdings Ltd of the UK.

Zoopla Property Group Plc of the UK acquired Hometrack.co.uk Ltd of the UK.

Tiger Topco 1 Ltd of the UK acquired Park Holidays UK Ltd of the UK.

Segro Plc of the UK acquired Airport Property Unit Trust of the UK.

Quarter 2 2017:

Busy Bees of the UK acquired Treetops Nurseries of the UK.

Capvest of the UK acquired Karro Food Group Ltd of the UK.

Midlothian Capital Partners Ltd of the UK acquired Park Leisure 2000 Ltd of the UK.

Lloyds Banking Group Plc of the UK acquired MBNA Limited of the UK.

Element Materials Technology Group Ltd of the UK acquired Exova Group Plc of the UK.

Quarter 3 2017:

Standard Life Plc of the UK acquired Aberdeen Asset Management Plc of the UK.

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12. Mergers and acquisitions that will feature in future releases

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

Vantiv Inc (USA) to acquire Worldpay Group Plc (UK).

Melrose Industries Plc (UK) to acquire GKN Plc (UK).

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13. How our statistics compare with external evidence

Our estimates for domestic and cross-border mergers and acquisitions during Quarter 4 (Oct to Dec) 2017 and for 2017 as a whole appear in line with the views of some external commentators.

Global merger, acquisitions and disposals activity can be driven by the availability of credit. Therefore, when credit conditions deteriorate, as happened in the 2008 to 2009 economic downturn, mergers and acquisitions (M&A) activity declines. M&A activity can also be affected by the economic outlook and company profits, in addition to a range of other economic factors. The process of completing an M&A transaction takes time and sometimes there may be a lag between improving economic conditions and any increase in M&A activity.

The Bank of England (BoE) Credit Conditions Survey – Quarter 4 2017 found that lenders reported a slight decrease in demand for lending from large private non-financial corporations and expected this to decrease in Quarter 1 (Jan to Mar) 2018. Overall demand for corporate lending from small and medium businesses was reported to be unchanged in Quarter 4 2017.

The BoE Agents’ Summary of business conditions – February 2018 update reported that growth in business services turnover had picked up slightly, but remained moderate. Growth was supported by an increase in mergers and acquisitions activity, property transactions and continuing strength in overseas demand for professional services. Spending on IT services also remained strong.

The BoE Agents’ Summary of business conditions – November 2017 update stated that a survey of investment intentions pointed to continued modest growth in spending over the coming year, at a similar rate to that seen over the past 12 months. Expectations of investment growth in the following two years were weaker.

Mergermarket Ltd, a provider of media services, reported in their 2017 Full Year Global M&A Trend Report that “Cross-border activity has once again been a key component of M&A in 2017, as confidence wanes in several regions it appears dealmakers are pursuing a strategy of spreading risk over consolidating within home markets despite the global geopolitical uncertainty”.

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14. Quality and methodology

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

  • the strengths and limitations of the data and how it compares with related data

  • 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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15. 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 Office for National Statistics (ONS) and it is the latter which are used in compiling statistical aggregates in 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 effect 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 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