During Quarter 4 (Oct to Dec) 2016, the estimates for the total number of successful domestic and cross-border mergers and acquisitions (M&A) involving UK companies remained relatively flat when compared with both Quarter 3 (July to Sept) 2016 and also with the same quarter of the previous year (Quarter 4 2015).
During 2016 (Jan to Dec), the number of successful inward and domestic M&A involving UK companies saw notable increases, showing the highest levels of M&A activity since 2008 and 2011; in comparison, the number of outward M&A involving UK companies declined.
In 2016, there were 227 successful inward M&A worth £187.4 billion making it the highest annual number since 2011 and with the highest annual value since we first published M&A data (1969).
During 2016, a total of 400 domestic M&A totalling £23.9 billion were successful, the highest number and value since 2008.
A short article has been published alongside this release to provide additional context for the large value of inward M&A during 2016.
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: email@example.com or telephone Sami Hamroush on +44 (0)1633 455087.Back to table of contents
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.Back to table of contents
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.Back to table of contents
During Quarter 4 (Oct to Dec) 2016, the total number of successful domestic and cross-border mergers and acquisitions (M&A) involving UK saw a decrease when compared with Quarter 3 (July to Sept) 2016 and also with the same quarter of the previous year (Quarter 4 2015). In contrast, the overall total value of successful M&A involving UK companies reported in Quarter 4 2016 saw a notable increase.
Overall in 2016 (Jan to Dec), the number of outward M&A activities involving UK companies remained at lower levels than observed during the 2008 to 2009 economic downturn (Figure 1).
In contrast, the number of inward and domestic M&A saw a notable increase in activity during 2016 when compared with 2015, representing year-on-year increases of 57% and 63% respectively.
The average quarterly value per M&A transaction since 2012 was above the long run quarterly average since 1997.
Recent M&A statistics can be put into context by comparing the M&A activity involving UK companies over consecutive 5-year intervals since 1997 (Table 1A).
Average outward M&A
On average, 128 acquisitions were completed each quarter during the 1997 to 2001 period (5-year interval), with an average value of £160 million per transaction. The average number of outward acquisitions continued to see a decline during the following 10 years (2002 to 2011), falling to 73 outward acquisitions with an average value of £101 million. For the period Quarter 1 (Jan to March) 2012 to Quarter 3 (July to Sept) 2016, the average number of outward acquisitions fell further to reach 31. While the average quarterly number in this last period was the lowest on the 5-year intervals considered, the average value per transaction of £147 million was the highest recorded since the 1997 to 2001 period.
The average value per transaction in Quarter 4 (Oct to Dec) 2016 is much higher than the average quarterly value between Quarter 1 2012 and Quarter 3 2016.
Average inward M&A
During the 5-year period 1997 to 2001, the average number of inward acquisitions was reported as 54 per quarter with an average value of £182 million. The following 10 years (2002 to 2011) experienced relatively stable levels of M&A activity before reaching an average number of 39 inward acquisitions with an average value per transaction of £270 million during Quarter 1 (Jan to Mar) 2012 to Quarter 3 (July to Sept) 2016. The average value per transaction has increased over each of the 5-year intervals.
Average domestic M&A
The average number of domestic acquisitions per has seen a decline since the 2002 to 2006 period. The average number of domestic M&A for 2002 to 2006 was 164 with an average value of £39 million per transaction before falling to 67 transactions with an average of value of £38 million in 2012 to 2016 Quarter 3 (July to Sept) period.
Table 1: The average number and value of mergers and acquisitions involving UK companies, grouped into 5 year intervals, 1997 to 2016
|Abroad by UK companies||Overseas companies in the UK||Between UK companies|
|Number||Value||Average value||Number||Value||Average value||Number||Value||Average value|
|1997 to 2014 Q4||80||10,440||130||49||9,481||193||126||6,426||51|
|1997 to 2001||128||20,402||160||54||9,900||182||136||10,921||81|
|2002 to 2006||79||6,812||86||46||9,203||199||164||6,448||39|
|2007 to 2011||67||8,014||119||54||11,813||218||121||4,807||40|
|2012 to 2016 Q3||31||4,538||147||39||10,617||270||67||2,531||38|
|Source: Office for National Statistics|
|1. At Quarter 1 2010, the deal identification threshold was raised for the mergers and acquisitions surveys was raised from £0.1 million to £1 million. There is therefore a discontinuity in the number of transactions reported as illustrated in the table.|
|2. Average value per transaction.|
|3. Quarter 1 is January to March, Quarter 2 April to June, Quarter 3 July to September and Quarter 4 is October to December.|
|4. At Quarter 4 2016, the actual number of completed deals is used to calculate the average value per transaction.|
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The number and value of domestic mergers and acquisitions (M&A) fell during Quarter 4 (Oct to Dec) 2016.
There were 56 successful acquisitions of UK companies by other UK companies in Quarter 4 2016 involving a change of majority share ownership, a 53% fall on the number of successful domestic M&A reported for Quarter 3 (July to Sept) 2016 (118 acquisitions) and the same number as recorded 2 years previous in Quarter 4 2014 (Figure 2).
During Quarter 4 2016, the value of successful domestic M&A was £1.9 billion compared with £3.4 billion reported in the previous quarter (July to Sept) reflecting a quarter-on-quarter decrease of £1.6 billion (47%).
Notable domestic acquisitions, valued at £100 million or more, that took place during Quarter 4 2016:Back to table of contents
Domestic mergers and acquisitions (M&A) activity saw a notable rise of 63% during 2016 (400 acquisitions), a considerable increase on the low number previously recorded in 2015 (245 acquisitions) although continuing to remain at lower levels reported during the years before the 2008 to 2009 economic downturn (Figure 2A).
Of the total 400 successful domestic acquisitions, 359 (90%) involved independently-controlled UK companies, while 41 (10%) were for acquisitions of subsidiaries that were part of larger companies.
During 2016, it was notable that Quarter 2 (Apr to June) (133 deals) and Quarter 3 (July to Sept) (118 deals) saw the highest levels of domestic M&A activity, with a combined total of 251 domestic acquisitions, 63% of the total number reported in 2016. In comparison, the number of domestic acquisitions in both Quarter 1 (Jan to Mar) and Quarter 4 (Oct to Dec) reported a combined total of 149, reflecting a difference of 102 acquisitions and 37% of the total number of domestic M&A in 2016.
The total value of domestic acquisitions for 2016 was £23.9 billion, with £18.6 billion being reported between Quarter 1 (Jan to Mar) and Quarter 2 (Apr to June). The majority of this expenditure (56%) involved issues of ordinary shares, while acquisitions involving cash accounted for 42%, with the remaining 2% represented by issues of fixed-interest securities (Table 9).
The highest quarterly value of domestic M&A was seen in Quarter 1 (Jan to Mar) 2016, at £11.9 billion; a small number of successful acquisitions with values over £100 million accounted for the majority of this.
It is possible to split out 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 a company, between 50.1% and 100%.
During 2016, there were 359 acquisitions of UK independently-controlled companies worth £10.5 billion, compared with 194 acquisitions valued at £4.6 billion reported in 2015 (Figure 3A).
The number of acquisitions for domestic subsidiaries in 2016 decreased slightly by 10 transactions reporting 41 successful acquisitions, compared with 51 reported in 2015. In comparison the value for acquisitions of domestic subsidiaries saw an increase, reporting £13.4 billion worth of M&A compared with £2.3 billion previously reported during 2015.
Other notable domestic acquisitions, valued at £100 million or more, that took place during 2016:
Quarter 1 2016
Quarter 2 2016
Quarter 3 2016Back to table of contents
Inward mergers and acquisitions (M&A) activity saw a notable increase in the value of successful transactions during Quarter 4 (Oct to Dec) 2016.
During Quarter 4 2016, the estimates for the number of successful inward M&A involving a change of majority ownership (37 deals) saw a 43% fall in the number when compared with the previous number reported in Quarter 3 (July to Sept) 2016 (65 deals). However, the value of completed M&A during Quarter 4 2016 reached a record high of £83.3 billion (Figure 4).
One large publically reported majority share transaction that completed during Quarter 4 2016 was the takeover of SABMiller Plc of the UK, which was acquired by Anheuser-Busch InBev of Belgium. This large transaction accounted for 95% of the total value of inward M&A (£83.3 billion) reported in Quarter 4 2016.
The following inward transactions, valued at £100 million or more, took place during Quarter 4 2016:
There were 7 completed inward disposals worth £2.6 billion during Quarter 4 2016, which was similar to the number and value reported in Quarter 2 (Apr to June) 2015 (10 disposals valued at £2.4 billion).Back to table of contents
The number and value of successful acquisitions of UK companies by foreign companies (inward mergers and acquisitions (M&A)) saw a considerable increase in both levels and value of M&A activity during 2016.
The comparison of annual trends for inward M&A shows that the estimate for the number of completed UK acquisitions in 2016 (227) was similar to that seen during 2010 and 2011 when the numbers of acquisitions were 212 and 237 respectively. Since 1988, inward M&A activity increased steadily until reaching a peak in 1993 before seeing a flat trend developing even though the amount of activity has been cyclical (Figure 4A).
The reported value of inward M&A increased notably in 2016, reaching a total of £187.4 billion – the highest since our records first began in 1969. While M&A figures have historically been volatile, the 2016 value was substantially larger than the previous high recorded in 2007 (£82.1 billion) and the value recorded in 2015 (£33.3 billion).
During 2016, the number of disposals of UK companies by foreign companies involving a change in majority ownership, saw a 17% decrease of activity when compared with 2015, totalling 29 disposals valued at £4.8 billion.
Other inward notable transactions, valued at £100 million, which took place during 2016:
Quarter 1 2016
Quarter 2 2016
Quarter 3 2016
During 2016, the number of successful inward M&A acquisitions (227) reported was broadly in line with the number reported in 2011 (237); the Americas (92) and Europe (93) were just 2 continents that showed increases year-on-year, of 26% and 94% respectively (Figure 5). The value of inward acquisitions saw a considerable increase between 2015 and 2016 of £154.1 million; the majority of this increase was seen in Europe with £126.0 billion reported during 2016 compared with £7.8 billion in 2015.
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The number and value of outward mergers and acquisitions (M&A) fell during the fourth quarter (Oct to Dec) 2016.
The number of completed acquisitions abroad by UK companies stayed consistent between Quarter 1 (Jan to Mar) 2016 and Quarter 3 (July to Sept) 2016, continuing to show relatively low levels of outward M&A activity.
In Quarter 4 2016, there was a 73% fall in the number of acquisitions abroad (13) made by UK companies, compared with Quarter 3 2016 (49). The number of successful outward M&A reported in Quarter 4 2016 is similar to the levels of outward M&A activity previously seen in Quarter 2 (Apr to June) 2013 (13) and Quarter 4 2013 (11) (Figure 6).
During the fourth quarter of 2016, UK companies spent £3.1 billion on acquisitions of foreign companies abroad, a similar value as reported in Quarter 3 2016 (£3.1 billion), but 64% lower than the value previously reported in Quarter 1 (Jan to Mar) 2016 (£8.6 billion).
The following outward notable transactions, valued at £100 million or more, took place during Quarter 4 2016:Back to table of contents
Successful outward mergers and acquisitions (M&A) activity experienced a notable downturn during 2016 for both the number and value of acquisitions involving a change of majority share ownership.
There were 135 successful outward M&A for the whole of 2016. This shows a decrease of 35 compared with the 170 acquisitions recorded in 2015; a year-on-year fall of 21%. With the exception of 2015, the levels of outward M&A activity have continued to fall since 2011 when 286 completed outward acquisitions were reported (Figure 6A).
The total value of completed acquisitions made abroad by UK companies for the whole of 2016 was £16.7 billion, similar to the value of £17.9 billion reported for 2012. The highest recorded outward M&A value of £181.0 billion was in 2000. The subsequent years saw a decrease in the value of outward M&A to £10.1 billion in 2009. In 2010, there was a slight increase in the value of outward acquisitions to £12.4 billion and a larger increase to £50.2 billion in 2011. Year-on-year comparison shows that the value of completed outward M&A between 2015 (£25.6 billion) and 2016 (£16.7 billion) has fallen by 35%.
Other outward M&A notable transactions, valued at £100 million, which took place during 2016:
Quarter 1 2016
Quarter 2 2016
Quarter 3 2016
The quarterly estimates for the number and value of disposals of foreign companies made by UK companies abroad (outward disposals) during Quarter 3 (July to Sept) and Quarter 4 (Oct to Dec) 2016 have been suppressed in this bulletin to avoid any potential disclosure in this type of M&A activity.
Between 2015 and 2016, successful outward M&A saw a year-on-year fall in the number of acquisitions in both Europe (61 acquisitions valued at £3.2 billion) and the Americas (49 acquisitions valued at £13 billion). The number of outward M&A in 2016 continues to remain at much lower levels than those previously reported for both continents in 2011, when Europe saw 104 acquisitions (£23.4 billion) and the Americas saw 113 acquisitions (£11.8 billion) (Figure 7).Back to table of contents
The mergers and acquisitions (M&A) data and information published in this release only includes 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:Back to table of contents
Our estimates for domestic and cross-border mergers and acquisitions, during Quarter 4 (Oct to Dec) 2016 and for 2016 as a whole, appear to be 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 interpreted 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 Review – Quarter 4 2016 reported that the overall demand for corporate lending from small and medium-sized businesses decreased significantly in Quarter 4 2016. Significant reductions in capital investment and commercial real estate were reported to be the main factors contributing to the changes in corporate lending demand in Quarter 4 2016, while mergers and acquisitions activity had pushed up on demand.
The Bank of England Agents Summary of business conditions – Quarter 4 2016 stated that professional services contacts had reported that mergers and acquisitions and foreign direct investment activity had picked up. However, both remained weaker than before the referendum.
Deloitte’s US/UK Deal Monitor, 2H 2016 publication reported that the UK remains highly attractive for US dealmakers as the rate of US deal making in the UK has been strong in the second half of 2016. However, some UK dealmakers have put M&A on hold.Back to table of contents
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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