Sterling’s post-Brexit vote collapse failed to provoke a foreign takeover rush
The dramatic reductions in the value of the pound since last summer's Brexit vote has failed to attract overseas bidders to UK businesses, according to new figures.
The number of British firms acquired by foreign businesses actually dropped in the second half of 2016, research from accountancy Moore Stephens shows.
There was a 30 per cent reduction in numbers of UK firms acquired by overseas companies on a year-on-year basis, a much more significant reduction than the number of takeovers by UK-based businesses.
By contrast acquisitions originating in the UK fell just 16 per cent over the same period.
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Moore Stephens head of mergers and acquisitions Debbie Clarke said: “The fall in the value of sterling has only partly made up for the Brexit bombshell. There has been no rush of ‘carpetbaggers’.
“Foreign buyers still have understandable concerns over the speed of growth of the UK economy and they worry that further currency volatility would impact the future value of any dividends they repatriate.”
Purchases from the US also fell, and Moore Stephens warned that if Donald Trump reduces taxs on repatriation of overseas cash, and corporation tax, there could be further delays on US-led M&A activity.
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Acquisitions from China also remained low, climbing from just eight in 2015 to 11 in 2016, with Moore Stephens warning of moves by the Chinese government to discourage aggressive overseas deals.
“Despite the collapse in sterling, Chinese companies have yet to start aggressively ‘bargain hunting,’ instead preferring to continue their focus on strategic acquisitions,” Clark said.
“Many Chinese buyers are still constrained by foreign currency control. However, this policy has been relaxed in recent years and looks set to improve in the future.
“If this continues, investment in specific sectors such as real estate – which Chinese investors are particularly keen on – should increase, buoyed by ‘discount’ opportunities in the UK.”
M&A activity dropped off globally in 2016 after record-breaking levels in 2015.
Over the year, there were 2,979 UK-targeted deals tracked by Dealogic, which were worth $222.3bn. The number of deals increased on 2015, up from 2,629, but their total value fell by 48 per cent from $431.6bn.