Mergers and Acquisitions involving UK companies: Quarter 4 October to December 2015

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

This is not the latest release. View latest release

This is an accredited national statistic.

Contact:
Email Michael Hardie

Release date:
8 March 2016

Next release:
07 June 2016

1. Main points

During 2015 (Jan to Dec) the total number and value of successful domestic and cross border mergers and acquisitions (M&A) involving UK companies continued to show low levels of activity compared with those seen before the 2008 to 2009 economic downturn.

During Quarter 4 (Oct to Dec) 2015 the total number of successful domestic and cross border M&A involving UK companies remained relatively flat when compared with Quarter 3 (July to Sept) 2015 and also with the same quarter of the previous year (Quarter 4 2014).

In Quarter 4 (Oct to Dec) 2015,136 completed acquisitions of foreign companies made by UK companies (outward M&A) were reported, compared with 113 during 2014, a year-on-year increase of 20%.

Quarter 4 (Oct to Dec) 2015 saw an increase in the total number of completed outward cross border M&A (33) compared with Quarter 3 (July to Sept) 2015 (22), showing a quarter-on-quarter increase of 50%.

During Quarter 4 (Oct to Dec) 2015 the number of both inward cross border (24) and domestic M&A (41) saw levels of activity fall by 27% and 25% respectively when compared with the numbers reported for Quarter 3 (July to Sept) 2015.

Back to table of contents

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: fdi@ons.gov.uk or telephone Michael Hardie on +44 (0)1633 455923.

Back to table of contents

3. Uses of Mergers and Acquisitions data

The estimates produced for mergers and acquisitions (M&A) are vital and important components of Foreign Direct Investment (FDI) flows data (inward and outward) and which is used to calculate the UK Balance of Payments published in the Blue Book and Pink Book.

Back to table of contents

4. Summary

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 are 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. Therefore it can be more appropriate to analyse trends over time.

During Quarter 4 (Oct to Dec) 2015 the total number of successful domestic and cross border M&A involving UK companies remained relatively flat when compared with Quarter 3 (July to Sept) 2015 and also with the same quarter of the previous year (Quarter 4 2014).There were a total of 107 completed domestic and cross-border M&A involving UK companies in Q4 2015. This total includes 41 domestic acquisitions, 33 outward acquisitions, 9 outward disposals and, 24 inward acquisitions. This represents a decrease of 11% on the previous quarter (Quarter 3 2015), when 120 completed domestic and cross border M&A was reported and also a year-on-year decrease of 7% on the number recorded in Quarter 4 2014 (129) (Figure 1).

Overall 2015 (Jan to Dec) saw total mergers and acquisitions activity involving UK companies remain at lower levels than experienced during the depth of the 2008 to 2009 economic downturn. There were a total of 447 domestic and cross border acquisitions which completed during 2015 compared with 412 in 2014, an increase of 35 acquisitions. This represents an 8% year-on-year increase overall of total M&A activity involving UK companies.

Recent M&A statistics can be put into context by comparing the low levels of recorded M&A activity involving UK companies over consecutive 5 year intervals since 1997 (Table 1A below).

Average Outward M&A

The average number of outward acquisitions during 1997 to 2001 (5 year interval) were reported as 128 completed acquisitions with an average value of £159 million per transaction. The average number of outward acquisitions continued to see a decline during the following 10 years reporting 67 outward acquisitions with an average value of £119 million, by the end of 2011. For the period Quarter 1 2012 to Quarter 3 2015 the average number of outward acquisitions fell further to report 26 with an average value of £178 million per transaction.

Average Inward M&A

During the 5 year period 1997 to 2001 the average number of inward acquisitions was reported as 54 with an average value of £183 million. The following 10 years (2002 to 2011) experienced relatively stable levels of M&A activity before reporting an average number of 34 inward acquisitions with an average value per transaction of £172 million during Quarter 1 2012 to Quarter 3 2015.

Average Domestic M&A

During the same 15 year period (1997 to 2011) the average number of domestic acquisitions saw a similar downward trend as reported by both outward and inward M&A. The average number of domestic M&A for 1997 to 2001 was 136 with an average value of £80 million per transaction before falling to an average of 57 domestic acquisitions by Quarter 3 2015.

Notes for Summary

  1. Quarter 1 is January to March, Quarter 2 is April to June 2015, Quarter 3 is July to September 2015 and Quarter 4 is October to December 2015.
Back to table of contents

5. Transaction in the UK by other UK companies (Quarter 4 Oct to Dec 2015)

There were 41 completed acquisitions of UK companies by other UK companies in Quarter 4 2015 involving a change in majority ownership. This is similar to the number of completed acquisitions recorded in Quarter 1 2015 (45) and represents a marginal decrease between both quarters of approximately 9%.

During Quarter 4 2015 the value of domestic M&A was reported as £0.7 billion. This is a similar value previously recorded at Quarter 3 2012 (£0.6 billion). However, the Quarter 4 2015 value of domestic M&A (£0.7 billion) shows a considerable decrease of 36% when compared with the value reported at Quarter 3 2015 (£1.1 billion).

Domestic M&A activity showed a slight rise of 4% during 2015 (197acqusitions), increasing on the low number previously recorded in 2014(189 acquisitions) although remaining at lower levels reported during the years before the 2008-09 economic downturn.

The estimates for the total number of domestic M&A continued to be dominated by acquisitions of independently controlled companies. 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%.

Of the total 197 successful domestic acquisitions 156 (79%) involved independent controlled UK companies, while 41 (21%) were for acquisitions of subsidiaries that were part of larger companies.

UK companies spent £6.2 billion when acquiring other UK companies during 2015. The vast majority of this expenditure (74%) involved cash transactions, while acquisitions involving the issue of ordinary shares accounted for 22%, with the remaining 4% representing issues of fixed interest securities (Table 9).

Back to table of contents

6. Transactions in the UK by foreign companies (Quarter 4 Oct to Dec 2015)

The number and value of acquisitions of UK companies by foreign companies (inward M&A) remained at flat levels of activity in all four quarters of 2015.

There were 24 successful inward acquisitions involving a change of majority share ownership in Quarter 4 2015, similar to the number reported in Quarter 1 2015 (28) and Quarter 2 2015 (29) However, Quarter 4 2015 recorded the lowest number of quarterly inward M&A since Quarter 1 2013 (19) and some 27% lower than the number recorded previously at Quarter 3 2015 (33 acquisitions).

During Quarter 4 2015, the total value for inward acquisitions also declined slightly, falling to approximately £8.0 billion, compared with £8.2 billion recorded in the previous quarter (Quarter 3 2015).

During 2015 there were a total of 114 acquisitions of UK companies by foreign companies, a small increase of 4 when compared with the number recorded in 2014 (110), although on a par with the number reported in 2009 (112 acquisitions) during the period of economic downturn.

The majority of the 114 inward acquisitions of UK companies which completed in 2015 were made by companies in The Americas (53%) and Europe (30%).

Back to table of contents

7. Transactions abroad by UK companies (Quarter 4 Oct to Dec 2015)

The number of completed acquisitions abroad by UK companies stayed consistent between Quarter 2 2015 and Quarter 4 2015, yet continued to show relatively low levels of outward M&A activity. There were 33 acquisitions abroad involving UK companies during the final quarter of 2015, broadly comparable to Quarter 4 2014 (35) and Quarter 2 2015 (32).

During the fourth quarter of 2015 UK companies spent £2.2 billion on acquisitions of foreign companies abroad, compared with previous quarter (Quarter 3 2015) when £1.8 billion was reported, a quarter-on-quarter increase of 22%.

Successful outward M&A activity experienced an upturn during 2015 for both the number and value of acquisitions involving a change of majority share ownership.

In 2015 there were a total of 136 acquisitions of foreign companies abroad made by UK companies, compared with 113 acquisitions recorded previously in 2014; a year-on-year increase of 20%. However, compared with both 2010 (199) and 2011 (286), the number of acquisitions have in fact fallen.

Of the 136 outward acquisitions which completed in 2015 the most noticeable countries in which UK companies undertook M&A were in Europe (44%) and The Americas (43%).

Back to table of contents

8. Transactions in the UK by other UK companies

In Quarter 4 2015 there were 41 acquisitions of UK companies by other UK companies that involved a change in majority ownership, similar to the number of completed acquisitions recorded in Quarter 1 2015 (45). Comparison between Quarter 3 2015 and Quarter 4 2015 shows that domestic M&A has fallen representing a quarter-on-quarter decrease of 25%.

Of these 41 domestic transactions there were 37 acquisitions involving UK independent companies representing the majority (90%) of total acquisitions in Quarter 4 2015, while acquisitions of subsidiaries involving UK company groups (4) accounted for the remaining 10%.

During Quarter 4 2015 the total value of domestic M&A was reported as £0.7 billion, a decrease of 42% when compared with the value reported in the previous quarter (Quarter 3 2015) of £1.2 billion.

Notable domestic acquisitions, valued at £100 million or more, that took place during Q4 2015:

The Paragon Group Of Companies Plc of the UK acquired Five Arrows Leasing Group Limited of the UK.

Convivality Retail Plc of the UK acquired Matthew Clark (Holdings) Ltd of the UK.

Trinity Mirror Plc of the UK acquired Local World Holdings Ltd of the UK.

Throughout 2015 the estimates for the numbers and values of domestic acquisitions remained relatively stable, reporting similar levels of M&A activity between Quarter 1 and Quarter 3 2015.

Of the 197 acquisitions of UK companies by other UK companies during 2015, it was notable that Quarter 2 and Quarter 3 2015 saw the highest level of M&A activity, reporting111 acquisitions. In contrast, the number of domestic acquisitions in both Quarter 1 and Quarter 4 2015 reported a total of 86 reflecting a difference of 25 acquisitions.

The total value of domestic acquisitions for 2015 was £6.2 billion, with approximately £4.4 billion being reported between Quarter 1 and Quarter 2 2015. Quarter 2 2015 saw the highest level of domestic M&A, reporting £2.7 billion; a small number of successful acquisitions with values over £100 million accounted for the majority of this value.

There were 197 acquisitions involving a change of majority ownership in 2015, an increase of 8 on the previous year (189).

The total value of domestic acquisitions in 2015 was £6.2 billion. This shows a decrease of 22% when compared with the value of £8.0 billion reported in 2014 and remains well below the values reported before the 2008-09 economic downturn.

Overall UK domestic M&A activity during 2015 has continued to remain at low levels of activity, a trend which was first seen in 2009 when the total value of domestic M&A was reported to be £12.2 billion.

It is possible to split out the number of domestic mergers and acquisitions 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 purchase of only a part of a company, between 50.1% and 100%.

During 2015 there were 156 acquisitions of UK independently controlled companies worth £4.1 billion, compared with 150 acquisitions valued at £6.0 billion reported in 2014.

The number and value of acquisitions for domestic subsidiaries increased slightly in 2015 reporting 41 acquisitions worth £2.2 billion compared with 39 acquisitions worth £2.0 billion in 2014.

Notable domestic acquisitions, valued at £100 million or more, that took place during 2015:

Quarter 1 2015

TPG Capital LLP of the UK acquired Prezzo Plc of the UK.

Bridgepoint Advisers Group Ltd of the UK acquired Gondola Central Ltd of the UK.

Ophir Energy Plc of the UK acquired Salamander Energy Plc of the UK.

Coalfield Resources Plc of the UK acquired Harworth Estates Property Group Ltd of the UK.

Quarter 2 2015

Towry Finance Co Ltd of the UK acquired Ashcourt Rowan Plc of the UK.

Kier Group Plc of the UK acquired MRBL Ltd of the UK.

Circassia Pharmaceuticals Plc of the UK acquired Prosonix Ltd of the UK.

Greene King Plc of the UK acquired Spirit Pub Company Plc of the UK.

Quarter 3 2015

Polypipe Group Plc of the UK acquired Nu-Oval Acquisitions 1 Ltd (Nuaire) of the UK

Daisy Group Holdings Ltd of the UK acquired Phoenix IT Group Plc of the UK

Back to table of contents

9. Transactions in the UK by foreign companies

Between Quarter 3 and Quarter 4 2015, the number of UK companies acquired by foreign companies (inward M&A) fell by approximately 27%. There were 24 completed inward acquisitions recorded in Quarter 4 2015, compared with 33 in the previous quarter, showing a continued decline for inward M&A activity since Quarter 3 2013 when 59 acquisitions were reported.

The value of acquisitions in the UK made by foreign companies (inward M&A) between Quarter 3 (£8.2 billion) and Quarter 4 2015(£8.0 billion) saw a slight decrease of 2%. However, the highest value for inward M&A was seen during Quarter 2 2015, when £9.8 billion worth of acquisitions were completed.

The following inward acquisitions, valued at £100 million or more, took place during Quarter 4 2015:

The Paragon Group of Companies of France acquired Five Arrows Leasing Group Ltd of the UK.

Nikkei Inc of Japan acquired Financial Times Group Ltd of the UK.

Platform Speciality Products Corporation of the USA acquired Alent Plc of the UK.

Marsh & Mclenna Companies Inc of the USA acquired Jelf Group Plc of the UK.

Terra Firma Investments (GP) 2 Ltd on behalf of funds of Guernsey acquired Infinis Energy Plc of the UK.

Entertainment One Ltd of Canada acquired Astley Baker Davies Ltd of the UK.

Steris Corporation of the USA acquired Synergy Health Plc of the UK.

Interoute Communications Holdings Ltd of Switzerland acquired Easynet Limited of the UK.

Providence Equity Partners VII-A LP/Providence VII Global Holding of the Cayman Islands acquired Chime Communications Ltd of the UK

Carlyle Group Management LLC (US) of the USA acquired The Innovation Group Plc of the UK.

The quarterly estimates for the number and value of disposals of foreign companies made by UK companies (inward disposals) during Quarter 4 2015 have been suppressed in this bulletin to avoid any potential disclosure in this type of M&A activity.

The comparison of yearly trends for inward M&A shows that the estimate for the number of completed UK acquisitions in 2015(114) reported a similar level to that seen during 2009 and 2014 when the numbers of acquisitions were reported as 112 and 110 respectively. Since 1988, inward M&A activity increased steadily until reaching a peak in 2007 (269 acquisitions) before then seeing a gradual decline of inward activity during 2008 (252 acquisitions) which has continued year-on-year through to 2015.

Further analysis of the trends in the value of inward M&A shows foreign companies spent £31.7 billion on acquisitions of UK companies during 2015.This represents a considerable increase of £16.5 billion when compared with the value of £15.0 billion previously reported in 2014.

Historically the values of inward acquisitions have recorded volatile levels of activity since figures were first published in 1986. The largest value for inward acquisitions (£82.1 billion) was reported in 2007 and thereafter a downward trend evolved with values gradually declining to the low values reported in 2012 (£17.4 billion) and 2014 (£15.0 billion).

During 2015, the number and value of disposals of UK companies by foreign companies involving a change in majority ownership saw an increase of activity, reporting 31 disposals valued at £7.0 billion.

Other inward notable transactions, valued at £100 million, which took place during 2015:

QUARTER 1 2015

Vidrala SA of Spain acquired Encirc Ltd of the UK.

Industrial & Commercial Bank of China (ICBC) acquired Standard Bank Plc of the UK

Standard Bank Group Plc of Luxembourg disposed of Standard Bank Plc of the UK.

Fortune Dynasty Holdings Ltd of the British Virgin Islands acquired Fortune Oil Plc of the UK.

De Persgroep Publishing N.V. of Belgium acquired Mecom Group Plc of the UK.

Vista equity partners fund ULP of the USA acquired Advanced Computer Software Group Ltd of the UK.

Stork Holdco LP of Bermuda acquired Songbird Estates Plc of the UK

Quarter 2 2015

Nikon Corporation of Japan acquired Optos Plc of the UK.

Slater and Gordon Ltd of Australia acquired Professional Services Division of the UK.

Brother Industries Ltd of Japan acquired Domino Printing Sciences plc of the UK.

Verisk Analytics Inc of the United States acquired Wood Mackenzie Ltd of the UK.

Banco de Sabadell S.A. of Spain acquired TSB Banking Group Plc of the UK.

Frasers Centerpoint Ltd of Singapore acquired MHDV Holdings (UK) Ltd of the UK.

Associated Newspapers Ltd of Bermuda acquired Ulysses Enterprises Ltd of the UK.

Wumei Holdings Inc of China acquired CMW (UK) Ltd of the UK.

KSL Capital Partners International of The Cayman Islands disposed of MHDV Holdings (UK) Ltd of the UK

Actavis Plc of Ireland acquired Auden McKenzie Holdings Ltd of the UK.

Quarter 3 2015

Ferrero International SA of Luxembourg acquired Thorntons Plc of the UK

Qualcomm Incorporated of the USA acquired CSR Plc of the UK

Walgreens Boots Alliance Inc of the USA acquired Liz Earle Beauty Co Ltd of the UK

Thermo Fisher Scientific Inc of the USA acquired Alfa Aesar Research Chemical Business (UK) of the UK

JBS S.A. of Brazil acquired Moy Park Holdings (Europe) Ltd of the UK

Argyle Street Management Holdings Limited of the British Virgin Islands acquired Asia Resource Minerals Plc of the UK

Fairfax Financial Holdings Ltd of Canada acquired Brit Plc of the UK

Optimal Payments Plc of the Isle of Man acquired Sentinel Holdco 2 Ltd of the UK

The Middleby Corporation of the USA acquired AGA Rangemaster Plc of the UK

Sentinel Group Holdings SA of Luxembourg disposed of Sentinel Holdco 2 Ltd of the UK

Avon Products Inc of the USA disposed of Liz Earle Beauty Co Ltd of the UK

Marfrig Global Foods SA of Brazil disposed of Moy Park Holdings (Europe) Limited of the UK

Lafarge Holcim Ltd of Switzerland disposed of share interests in Lafarge Tarmac Holdings of the UK

CRH Plc of the Republic of Ireland acquired LarfargeTarmac Holdings of the UK.

During 2015 the number of successful inward M&A acquisitions (114) reported was broadly in line with the number reported in the 2014 (110); the Americas (60) and Asia (14) were the two continents which showed increases year-on-year of 20% and 17% respectively. In contrast the value of inward acquisitions saw a considerable increase between 2014 and 2015; the majority of this increase was seen in the Americas with £7.6 billion reported in 2014 compared with £20.1 billion in 2015.

Back to table of contents

10. Transactions abroad by UK companies

In Quarter 4 2015 there was a 50% increase in activity of the number of acquisitions abroad (33) made by UK companies compared with Quarter 3 2015 (22). The number of outward acquisitions has remained stable to the numbers previously reported in Quarter 4 2014 (35) and Quarter 2 2015 (32).

During Quarter 4 2015 the value of outward acquisitions was recorded as £2.2 billion, an increase of £0.4 billion on the value reported at Quarter 3 2015 (£1.8 billion). In Quarter 2 2015, there was a noticeable increase in the value of acquisitions abroad by UK companies( £11.0 billion) that can be explained by a few acquisitions which were successfully completed with values over £100 million.

There were 136 successful outward acquisitions for the whole of 2015 and although this shows an increase of 23 since the previous year (2014) the levels of outward M&A activity have continued to fall since 2011 when 286 completed outward acquisitions were reported.

The following outward notable transactions, valued at £100 million or more, took place during Q4 2015:

Tesco Plc of the UK disposed of Homeplus Co Ltd of South Korea.

Diageo Plc of the UK disposed of GAPL Pte Ltd of Singapore.

Diageo Plc of the UK disposed of Udiam Holdings Aktiebolag of Sweden.

GKN Plc of the UK acquired Fokker Technologies Group B.V. of the Netherlands.

Clinigen Group Plc of the UK acquired Link Healthcare Private Ltd of Singapore.

Markit Group Holdings Limited of the UK acquired Coreone Technologies Holdings LLC of the USA.

Intertek Group PLC of the UK acquired Professional Service Industries Acquisitions Inc of the USA.

Rentokil Initial Plc of the UK acquired The Steritech Group Inc of the USA.

Benchmark Holdings Plc of the UK acquired INVE Aquaculture Holding B.V. of the Netherlands.

Royal Bank of Scotland of the UK disposes of INVE Aquaculture Holding B.V. of the Netherlands.

The total value of completed acquisitions made abroad by UK companies for the whole of 2015 was £24.4 billion, similar to the value of £20.6 billion reported in the previous year (2014). 2000 saw the highest recorded value on record of £181.0 billion. Since 2007, when the value of acquisitions made abroad by UK companies was £57.8 billion, the presiding years saw a decrease in the value of acquisitions to £10.1 billion in 2009. In 2010, there was a slight increase in the value of acquisitions to £12.4 billion, and subsequently a larger increase to £50.2 billion in 2011. The 2015 figure of £24.4 billion represents a 58% decrease compared to the figure recorded in 2007.However year-on-year comparison shows that the value of outward M&A between 2014 (£20.6 billion) and 2015 (£24.4 billion) has increased by 18%. Although the number and value of outward acquisitions have increased during 2015, the level of outward M&A activity is still lower than that reported before the economic downturn of 2008-09.

Outward notable transactions, valued at £100 million, which took place during 2015:

Quarter 1 2015

InterContinental Hotels Group Plc of the UK acquired Kimpton Hotel & Restaurant Group LLC of the USA.

Standard life plc of the UK disposed of Standard Life Financial Inc and Standard Life Investments Inc of Canada.

Essentra Plc of the UK acquired Blue NewCo 1 BV of the Netherlands.

IMI Plc of the UK acquired B&R Holding GmbH of Germany.

Barclays PLC of the UK disposed of Barclays Bank S.A.U of Spain.

RPC Group Plc of the UK acquired Promens Group AS of Norway.

BTG PLC of the UK acquired PneumRx Inc of the USA.

Old Mutual Plc of the UK acquired Penrose Topco Ltd of Jersey.

Clarkson plc of the UK acquired RS Platou ASA of Norway.

Quarter 2 2015

Aviva Plc of the UK acquired Friends Life Group Ltd of Guernsey.

International Game Technology Plc of The UK acquired International Game Technology Inc of the United States.

Old Mutual Plc of the UK acquired UAP Holdings Ltd of Mauritius.

Circassia Pharmaceuticals Plc of the UK acquired Aerocrine AB of Sweden.

DS Smith Plc of the UK acquired Sulipo Zweite Beteiligungsverwaltungs GmbH (Duropack GmbH) of Austria.

Royal & Sun Alliance Insurance Plc of the UK disposed of Royal & Sun Alliance Insurance (Singapore) Plc.

Direct Line Group Ltd of the UK disposed of Direct Line Vesicherung Aktiengesellschaft of Germany.

Direct Line Group Ltd of the UK disposed of Direct Line Insurance SPA of Italy.

Imperial Tobacco Group Plc of the UK acquired Assets of Reynolds and Lorillard Inc of the United States.

Just Eat Plc of the UK acquired Menulog Group Ltd of Australia.

BG Group Plc of the UK disposed of QCLNG Pipeline Pty Ltd of Australia.

Quarter 3 2015

British American Tobacco Plc of the UK acquired TDR d.o.o. of Croatia.

Bridgepoint Advisers Group Limited of the UK acquired Nordic Cinema Group Holding AB of Sweden.

Ultra Electronics Holdings Plc of the UK acquired the Electronics Products Division of Kratos Defense & Security Solutions Inc of the USA

Zegona Communications Plc of the UK acquired Telecable de Asturias S.A. of Spain

D S Smith Plc of the UK acquired Grupo Lantero's Corrugated Business of Spain

Anglo American Plc of the UK disposed of Anglo American Norte S.A. of Chile.

Bridgepoint Europe IV Nominees of the UK disposed of Infront Sports and Media AG of Switzerland

Between Quarter 1 and Quarter 4 2015 the numbers of completed outward disposals reported were relatively flat and broadly in line with the numbers previously reported during Quarter 4 2014 (4). In Quarter 4 2015 there were 9 successful outward disposals which completed valued at £4.7 billion compared with 4 disposals valued at £1.3 billion that completed in the same quarter of the previous year (Quarter 4 2014).

Between 2014 and 2015, successful outward M&A saw an increase in the numbers and values of acquisitions activity in both Europe (60 acquisitions valued at £15.1 billion) and the Americas (59 acquisitions valued at £7.6 billion). However, the numbers continue to remain much lower than those previously reported for both continents in 2011 when Europe recorded 104 acquisitions (£23.4 billion) and the Americas reported 113 acquisitions (£11.7 billion).

Back to table of contents

11. Additional information

The M&A data and information published in this release only includes data for acquisitions, mergers and disposals which 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.

ARRIS Group Inc of the USA acquiring Pace Plc of the UK.

Smith & Nephew Plc of the UK acquired Bluebelt Technologies Inc of the USA..

BT Group Plc of the UK acquiring EE Ltd of the UK.

Back to table of contents

12. How our statistics compare with external evidence

The ONS estimates for domestic and cross border mergers and acquisitions, during Q4 2015 and for 2015 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, 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 quarter-on-quarter increase in M&A activity.

The Bank of England Credit (BOE) Conditions Review- Q4 2015 reported that net lending to UK businesses had picked up in the three months to November 2015. There was evidence of an increase in demand from large and medium sized corporates with lenders reporting that a significant driver of this increase was a growing appetite for mergers and acquisitions. Most major UK lenders noted that the increase was driven by a number of large deals and that the demand for credit from small firms had fallen.

The Office for Budget Responsibility’s Economic and fiscal outlook November 2015 stated business investment grew relatively strongly in the first two quarters of 2015. However, bank lending to non financial corporates has generally fallen on an annual basis over the past 6 years. Restricted credit appears to have hit smaller firms harder, although recently net lending growth to SMEs has turned positive in the 12 months to September 2015.

Experian MarketIQ in its UK Regional Report for Quarterly M&A, stated that despite a slight lessening of activity in the final quarter of the year, 2015 saw a definite upturn in the UK deal market, as increased confidence at both ends of the market finally translated into increased numbers on the board.

Back to table of contents

13 .Background notes

1. Overview of Mergers and Acquisitions (M&A)

The M&A estimates are analysed and produced to measure investment data for:

(i) Investment in the UK by UK companies (Domestic investment)
(ii) Investment/Disinvestment in the UK by foreign companies (Inward investment/disinvestment)
(iii) Investment/Disinvestment in foreign companies by UK companies (Outward investment/disinvestment)

Within ONS, M&A data are essential for producing the National Accounts. The survey results form important components of the UK Balance of Payments and Financial Accounts and are vital in the measurement of the financial and non-financial business sector accounts. M&A data is used in the compilation of the estimates for Foreign Direct Investment and additionally used by other government departments when preparing ministerial briefings. For example, HM Treasury, The Department for Business, Innovation and Skills, UK Trade & Investment and HM Revenue and Customs. The M&A data estimates are also used by foreign embassies, economists and academics for research purposes and for periodic statistical comparisons.

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: m&a@ons.gov.uk or telephone Michael Hardie on +44 (0) 1633 455923

3. Basic quality information

The Quality and Methodology Information for M&A surveys report describes in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.

4. Relevance to users

The degree to which the statistical outputs meet users’ needs.

Within ONS, the mergers and acquisitions data are considered to be essential for producing the National Accounts. The survey results form important components of the UK Balance of Payments and Financial Accounts and are vital in the measurement of the financial and non-financial business sector accounts.

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 which lead to a holding in excess of 10% of the issued share capital. These estimates then feed into the UK Balance of Payments and the 'Rest of the World' sector of the financial accounts in the National 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.

Elsewhere in government, examples of departments who use the data include:

  • HM Treasury, Economic Analysis Division, where the data are used in preparing briefing and forecasting

  • Department for Business, Innovation and Skills, where direct investment data are required for ministerial briefing, parliamentary questions and in formulating trade policy

  • UK Trade & Investment, where the information is used for briefing on the extent to which the UK is successful in attracting inward investment

  • HM Revenue and Customs, where the data are used to help in forecasting company taxation.

Non-government users include:

  • private companies which are interested in analysing country and industry data for trends by foreign firms in the UK and by UK companies abroad and also for researching corporate finance activity and for the purpose of investment banking

  • UK embassies in foreign countries, who are interested in information on specific countries and companies making acquisitions

  • private sector economists, journalists and academics who are interested in information on particular industries and particular countries for research purposes and who use the data for periodic statistical comparisons.

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

Source of data:

The information collected is based on reports in the financial press, specialist magazines, company and financial websites supplemented by special surveys to businesses 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 mergers, demergers, acquisitions and disposals. Figures relating to mergers are included within acquisitions and those relating to demergers are contained within disposals.

ONS makes 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 capture 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’s not possible for all data movements to be fully explained.

ONS 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 (see note 7 in the background notes) 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 figures record when a transactions legally completes as opposed to when the transaction has been announced in the press. The complexities surrounding the acquisitions/disposals taking place often incurs a time lag, which can vary between quarters.

5. Significant transactions

Significant Transactions tables show the reported figures for a selection of significant transactions which 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 which are used in compiling statistical aggregates in tables 1-10. 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.

6. Types of transactions covered

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 which 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.

7. 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.

8. Definitions of geographic areas

9. Revisions

Data for Quarter 1 (Jan to Mar), Quarter 2 (Apr to June) and Quarter 3 (July to Sept) 2015 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) and Quarter 3 (July to Sept) 2015 have been published in this statistical bulletin. No further revisions to data prior to Quarter 1 (Jan to Mar) 2015 have been made. Therefore time series data for all quarters of 2014 and any previous historic quarterly periods remain unchanged.

Annual data tables for 2015 are produced in conjunction with the Quarter 4 (Oct to Dec) 2015 data. Revisions to the 2014 quarterly and annual figures were recalculated at Quarter 1 (Jan to Mar) 2015 only. Therefore no revisions to annual data prior to 2014 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:

Completion of transactions:

On announcement of a proposed transaction an expected completion date is usually given. The publicly reported values will be allocated to the quarter of expected completion. If the transaction is ultimately completed in an earlier or later quarter, the recorded values will be reallocated to the new quarter.

Publicly reported values:

Publicly reported values are initially used to compile the aggregates. These can vary considerably from the values ultimately supplied by the respondents, frequently because the assumption of debt has been included in the publicly reported value. A nominal value is applied if no publicly reported value is available. The final values used to create the aggregates are those supplied by the respondent.

Non-completion of transactions:

On announcement of a proposed transaction the publicly reported value of the transaction is recorded. If the transaction does not subsequently take place the recorded value will be deleted.

Non-share transactions:

On announcement of a proposed transaction it may appear that there will be transactions in the share capital of the companies involved and the publicly reported values will be recorded. If subsequent information contradicts this the recorded values will be amended or deleted.

Control:

On announcement of a proposed transaction it may appear that the transaction will give the purchasing company control of the purchased company, that is, a share ownership of greater than 50%. If subsequent information contradicts this the recorded values will be amended or deleted.

Revisions from respondents:

Very occasionally respondents revise the values that they have previously supplied to ONS. The revised values are those used to create the aggregates.

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 i.e. if early estimates are consistently under or overestimating 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.

10. Response rates

11. Notes to Tables

The deal identification threshold was increased at Quarter 1 (Jan to Mar) 2010 to a value of £1.0 million from a previous value of £0.1 million. As a consequence there is a discontinuity in the value and number of deals reported from Quarter 1 (Jan to Mar) 2010 onwards compared with previous periods.

Symbols used in the tables are:

.. Figure suppressed to avoid disclosure of information relating to individual enterprises. – Nil or less than half the final digit shown.

The sum of constituent items in tables may not always agree exactly with the totals shown due to rounding.

12. 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.

13. Office for National Statistics

The Office for National Statistics (ONS) is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to Parliament. ONS is the UK government's single largest statistical producer. It compiles information about the UK's society and economy, and provides the evidence-base for policy and decision-making, the allocation of resources, and public accountability. The Director General of ONS reports directly to the National Statistician who is the Authority's Chief Executive and the Head of the Government Statistical Service.

The UK Statistics Authority has reviewed this publication in their report: “Assessment of compliance with the Code of Practice for Official Statistics”: Statistics of International Transactions, which was published on 8 December 2011. This review recommended that the Mergers and Acquisitions estimates be designated as National Statistics, subject to ONS carrying out certain requirements. ONS met all of these requirements on 3 May 2013.

Designation can be broadly interpreted to mean that the statistics:

  • meet identified user needs
  • are well explained and readily accessible
  • are produced according to sound methods
  • are managed impartially and objectively in the public interest

Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

14. Social Media

Follow ONS on Twitter and receive up to date information about our statistics.

Like ONS on Facebook to receive our updates in your newsfeed and to post comments on our page

15. The Government Statistical Service (GSS)

The Government Statistical Service is a network of professional statisticians and their staff operating both within the Office for National Statistics and across more than 30 other government departments and agencies.

16. Government Statistical Service (GSS) Business Statistics

To find out about other official business statistics, and choose the right data for your needs, use the GSS Business Statistics Interactive User Guide. By selecting your topics of interest, the tool will pinpoint publications that should be of interest to you, and provide you with links to more detailed information and the relevant statistical releases. It also offers guidance on which statistics are appropriate for different uses.

17. 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.

18. Next Publication Date: 7 June 2016

Issued Body:
Office for National Statistics, Government Buildings, Cardiff Road, Newport NP10 8XG

Media Contact Details:
Telephone: Media Relations Office +44 (0)845 6041858
Emergency on-call: + 44 (0)7867 906553
Email: media.relations@ons.gov.uk

Statistical contact: Michael Hardie
Tel: +44 (0) 1633 455923
Email: michael.hardie@ons.gov.uk

19.

Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gov.uk

These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Back to table of contents

14 . Methodology

Contact details for this Statistical bulletin

Michael Hardie
michael.hardie@ons.gov.uk
Telephone: +44 (0) 1633 455923