Almost 90 per cent of UK companies have divestment plans in next two years
Almost 90 per cent of UK companies plan to divest some shares in the next two years, with 72 per cent intending to make a disposal in the next year.
Although the disposal intentions of UK companies remain high, above the global figure of 84 per cent and up from a UK figure of 46 per cent in 2015, they have weakened since last year when 97 per cent of firms planned to make divestments.
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A survey of 900 executives by audit firm EY found streamlining operations and reinvesting capital were the main motivators to sell.
Over the next year, 77 per cent of UK executives expect to see more large-scale transformational deals, up from 50 per cent in 2018.
Charles Honnywill, transactions partner at EY, said: “Divestments remain high on the UK corporate agenda. An uncertain or fluid market outlook can hinder deal activity, but can also make a disposal an imperative as companies adjust their portfolios to new realities.”
Over three-quarters of UK companies said Brexit may influence their plans to divest within the next year.
More than 60 per cent of UK respondents said macroeconomic and geopolitical factors would influence their divestment decisions, compared to 52 per cent globally.
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Honnywill said: “Despite the geopolitical uncertainty, there is still the underlying need to streamline operating models, which remains the most compelling reason for UK companies to divest.
“A weaker pound has also made UK assets more affordable – especially for US buyers, bolstered by the stronger dollar and US tax reform – but there is still the big question of what comes post Brexit. Disposal deals directly triggered by Brexit are yet to come.”