UK PLC for Sale

Roll up, roll up, everything must go. UK PLC is up for sale. With the number of recent UK takeovers, you could be forgiven for thinking that the UK has become the focus of bargain hunting for overseas buyers. With the Brexit-inspired collapse in sterling, international investors and cash rich private equity houses are buying up UK plc.

Over the summer we have seen Greene King succumb to a £2.7 billion bid from Li Ka-Shing, following on from a spate of takeovers including Saputo (Canada) acquiring Dairy Crest and Lego/Blackstone taking out Merlin Entertainments. Cobham is now under attack from a US based PE house and every week there seems to be M&A action in the PLC arena.

Since the referendum, the pound has fallen 18% against the dollar and the public markets are now a huge opportunity for cash rich buyers, particularly private equity houses who have to do deals to make money.

It is interesting that the main activity is in the public markets rather than the unquoted sector, which remains subdued pending some direction from Parliament.  The Bishopsgate team have a number of deals closing prior to Xmas, but they also have a number of mandates “on hold” pending some clarity. The Bishop expects deal activity to return to normal in Q1 2020 but we all have one eye on Westminster. 

2018 - a bumper year for M&A despite Brexit uncertainty

Despite the Brexit overhang, 2018 was another bumper year for the UK M&A market. According to Experian there were 7,539 deals announced in 2018, up 2.3% on the 7,369 transactions completed in 2017. This was the highest number of annual transactions ever recorded by Experian against a backdrop of political and economic uncertainty.

Deal activity across the Midlands remained relatively static compared to the previous year, with 977 deals announced versus 967 in 2017. Overall, total deal value fell by 1.8% to £18.2bn but it was 35% higher than the 2016 outcome. The Midlands was the third busiest region of the UK in 2018.

Just over 15% of deals in the region were financed via private equity, making it the second most common form of funding in the region. The 150 deals funded by private equity also represented a 34% increase in the number of private equity deals compared to 2017.

Bishopsgate finished the year strongly with the sale of an undisclosed manufacturing business to a listed Indian buyer and, in the last two weeks, completed on the sale of Davies Veterinary, Europe’s leading veterinary hospital to Mars Petcare. The midnight oil is being burnt in Stamford with several deals due to complete in the next 4 to 6 weeks; however, we have several projects “on hold” ready for launch as soon as the cloud lifts over Whitehall. When that will happen is anybody’s guess.