Private equity

UK inward M&A deals soar to £27.7 in Q2 2021 billion signalling strong economic prospects

Posted by MoneyController on 14.09.2021

Private equity deals have had their year and so have mergers and acquisitions (M&A). According to data from the Office for National Statistics (ONS), the total value of inward M&As reached £27.7 billion in Q2 2021. That shows foreign companies have been eyeing UK companies as attractive investments. Deal values have more than tripled compared to Q1 2021 when deal values totalled only £8.3 billion. 

Domestic deals also witnessed heightened activity as UK companies spent £10.6 billion during the quarter to acquire other UK companies. That compares with a total deal value of £4.5 billion in Q1 2021. Two notable deals for the quarter include the energy company National Grid Plc’s acquisition of utility company PPL WPD Investments Ltd for £7.8 billion. Pennon Group Plc, an environmental utility infrastructure company, also acquired Bristol Water Holdings UK Ltd, a drinking water supplier, in a deal worth £810 million.

As for outward M&A, where UK companies acquire foreign companies, deal value totalled £6 billion, up from £4.2 billion in Q1. Deals had reached a peak at 246 deals in March 2021, after dropping to as low as 58 deals in May 2020. Deal activity for Q2 2021 hovered between 127 deals in April and 131 deals in June. 

Increased M&A activity is due to the improved economic situation following the removal of Covid restrictions and the success of vaccination. The pandemic had halted corporate expansion plans as lockdowns pressured business and economic activity. Optimism is back within corporate and management boards, allowing them to proceed with expansion plans

Merlin Piscitelli, from Datasite, commented that the increase shows that companies are pursuing industries and sectors with significant growth potential. The site’s research data showed a 50% increase in tech M&A deals between January and August 2021 compared to the same period in 2020. 

Meggit, Blue Prism, and Ultra Electronics are a few UK companies that confirmed takeover talks with US firms. He added that these deals are helping the UK forge a post-pandemic and post-Brexit identity. Piscitelli mentioned that upcoming data from the ONS would show the effectiveness of the recent reforms to SPACs and the long-term trends in M&A. 

How does all this fair for investors? 

First, the synergies created from M&A deals would increase investment value. Second, increased M&A is a vote of confidence for the economy as a whole. That will lead to positive ripple effects on the stock market, which would ultimately benefit investors. 

To invest in UK firms, get in touch with one of our financial advisers in London.  

 

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