Sticky inflation and regulatory pressure push UK deals to lowest level since 2016
Mergers and acquisitions in the UK have slumped to their lowest level since 2016 this year as sticky inflation and meddlesome regulators unsettle dealmakers, new figures have revealed.
The total value of mergers and acquisitions involving UK firms halved to just under $90bn in the first five months of the year despite a predicted flurry of take-private deals on UK public companies, according to data from LSEG Deals Intelligence analysed by Hargreaves Lansdown.
Lingering inflation and rising interest rates in the UK have sparked wild swings on markets over the past year and caused a major slowdown. Analysts at Hargreaves Lansdown said today that despite a “concentrated spate of private equity approaches” the situation had become “frosty”.
“This is a result of stronger and stickier inflation, as well as renewed pressure from competition authorities,” said analyst Sophie Lund-Yates.
“The decision to block Microsoft’s takeover of Activision was largely seen to embody the challenge facing the UK. The region is seen by some as a less accommodating place in which to do big business, and this could have implications across UK valuations.”
The Competition and Markets Authority’s move to block the Microsoft deal triggered fury from bosses on both sides, with Activision claiming the move showed the UK was “closed for business”.
The slowdown in deals to start the year comes despite many analysts predicting a wave of takeovers in the UK in 2023 as foreign buyers swooped on UK listed firms.
Private equity firms have launched bids for firms including Wood Group and THG bit have failed to get deals over the line amid pushback from board and investors.
Apollo had its bids for Wood Group and THG rejected multiple times. Dechra however agreed to a takeover from Swedish EQT this morning.