UK M&A dealmakers ramp up charge on US acquisitions as the States takes the spotlight over China and India
UK dealmakers upped the number of US acquisitions in the second half of last year – rising more than a fifth, according to fresh analysis by Deloitte.
Its latest US/UK M&A deal monitor found that the UK acquired 109 US firms in the second half of the year, up 23.9 per cent on the 88 deals tied up in the equivalent period of 2016.
The value of disclosed mergers and acquisitions (M&A) between the US and the UK reached $36.9bn in the second half of the year, comprised of $23.3bn of deals from US buyers in the UK, and $13.6bn from UK buyers in the US.
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Cahal Dowds, vice-chairman of Deloitte UK, said UK buyers “clearly see the US as the place with growth potential, favouring it over China and India”.
In contrast though, US buyers’ pace slowed as they dealt with both tax law changes and the uncertainty lingering as Brexit fast approaches. They acquired 156 UK firms in the second half of 2017, down 13.8 per cent on the 181 deals wrapped up in the second half of 2016.
The trend was reflected over the full year, with US acquisitions down 11.3 per cent, but up 21.3 per cent for UK acquirers in the States.
Dowds said:
US dealmakers are pausing for breath on UK acquisitions as tax laws take effect there and they observe the progress of Brexit over here. This means the world’s largest bilateral deal corridor by value is still intact, but the activity is shifting over to UK acquirers buying in the States.
“Given the relative size of the economies (with the US alone being six times bigger than the UK) the interest from UK acquirers is significant and I would expect activity to continue in both directions,” he added. “Despite a short term pause from US acquirers, the fundamentals remain in place.”
In a low interest rate environment, Dowds noted there were still “vast amounts of corporate cash reserves and funds from private equity to be deployed”. January proved to be a robust month for M&A globally, though Dowds said market volatility had returned to the stock market after a long period of steady growth.
“Time will tell if this is a widely anticipated correction, or a cause for alarm,” he said.
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