M&A slowdown in UK: tech and telco sector still strong

10 July 2013

The first six months of 2013 saw a total of 484 UK-targeted merger and acquisition (M&A) deals valued at £40.6bn, down 16.5% and 10.9% by volume and value respectively, from H1 2012 when the totals were 581 deals worth £45.6bn, reports Mergermarket.

The technology sector, especially the telco element, has been responsible for a few deals, but nothing on the ‘pure play’ magnitude of the failed HP/Autonomy deal has been seen recently, with more recent deals so far this year involving Vodafone and Virgin Media not so FI technology focused. Considering how the Autonomy deal turned out, however, that isn’t perhaps such a bad thing.

The largest tech deals so far this year have been in the telco sector with the US Liberty Global £15bn takeover of Virgin Media the standout UK deal. The Vodafone Group takeover of Kabel Deutschland Holding was also huge, but not quite so UK-specific operationally speaking.

The Mergermarket specialist intelligence and analysis service report covers all industrial sectors, not just technology, and shows that in Q213 the UK became more active in the search for companies outside of its borders in the search for growth. M&A deals in the country rebounded from a Q1 low of £3.7bn, the lowest quarterly value since Q4 2009 (£3.4bn). Q2’s 106 deals were over five times the Q1 value £23.7bn and also 119.4% above Q212 (£10.8bn), which resulted in the highest quarterly outbound value since Q310 (£41.2bn).

By contrast, inbound M&A experienced a 42.6% decrease in Q213 (£11.9bn) compared to Q113 (£20.7bn) and 42.5% decline from Q212 (£20.7bn). This total comes with just 86 announced deals, the lowest figure since Q409, which saw 81 deals.

Telecommunications was the most active sector by value in H113 following Liberty Global’s £15bn takeover of Virgin Media in February, which had a strong technology edge of course. With £16.3bn worth of deals the telco sector accounted for 40.1% of total M&A value, replacing the leading sector in H112 which was the energy, mining and utilities sector.

Goldman Sachs topped the financial advisor league table by value in H113 with £34.5bn after it advised on the largest deal of Q213, which was the Vodafone Group - Kabel Deutschland Holding transaction valued at £8.9bn. JPMorgan Cazenove was second with £31.4bn-worth of deals, jumping from eighth place in H112.

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