‘Considerable decline’ in deals value across the region
Deal volumes in the first half of 2019 in the Midlands have stayed “relatively on par” with those recorded in the same perios last year but total value has seen a “considerable decline”, a report out today reveals.
According to Experian’s H1 M&A Report, overall there were 472 deals worth just over £6.6bn involving a Midlands company announced across the first half of 2019, representing a 1.3% and 47.4% decline in volume and value, respectively.
The volume and value figures are both the second lowest H1 totals recorded over the last five years, with only 2015 seeing fewer deals announced (421) and 2016 recording a lower total value (£4.4bn) – and both figures fall well under the five-year average for the region of 490 announced deals worth £8.5bn.
Overall the Midlands accounted for 13.5% of all UK deals but only 7.7% of their total value.
US-based consumer packaging products firm Berry Global’s now completed £3.3bn takeover of Maldon, plastic container manufacturer RPC Group, initially announced in March, remains the region’s largest transaction so far in 2019 – and by a considerable margin, being the only transaction to break the £0.5bn mark.
The Midlands’ second largest deal of the year so far was the only new deal to break into the first quarter’s top five, with a valuation of £415m. This saw London-based property investor LondonMetric Property acquire Halesowen commercial and industrial property developer A&J Mucklow in a deal designed to create a larger and more resilient property investment company that should benefit from operational synergies and enhanced management expertise.
The deal also saw several private equity investors exit the company and Mucklow’s shares de-listed from the London Stock Exchange.
Manufacturing continues to be the region’s most active industry in 2019, with its 142 announced deals representing approximately 30% of the region’s total. This is roughly similar to H1 2018, where the 146 deals announced also then represented approximately 30% of the regional total. While volumes have remained relatively static, total value for manufacturing has dropped by over 63%, from £9.8bn to just under £3.6bn. The wholesale and retail industry saw increases in both volume and value, with the 11% increase in volume to 120 announced deals making it second most active industry over professional services (97), which has seen a 16% drop in volume after holding the number two spot in H1 2018.
Where funding arrangements were disclosed, just over 36% (66 deals) of all Midlands deals were funded at least in part via new bank debt, up from 34% of deals in H1 2018 (61). HSBC was the most active debt provider, funding 15 deals.
Despite this the total value of debt funded deals fell by almost 55% year on year, to just over £4.1bn. Private equity was involved in funding 28% of deals, with their total value up by almost 240% to £481m – despite more deals (61) and a higher proportion (34%) being funded by this method in H1 2018.
Advisers Gateley worked on 28 deals in H1 to narrowly pip Harrison Clark Rickerbys (27 transactions) to rank as the busiest legal adviser in the Midlands region so far in 2019; Browne Jacobson made up the top three on 22.
Slaughter and May head the value table by some way with £3.3bn worth of transactions, after advising on the RPC Group takeover, with CMS and Addleshaw Goddard in second and third on £641m and £415m, respectively. The financial adviser volume table was topped by Numis Securities on 20 deals, with RSM not far behind on 16.
The financial value table was led by Rothschild & Co, which advised on £3.8bn worth of deals, including three of the region’s top ten most valuable. In second place was Goldman Sachs on £3.5bn and rounding out the top three was Credit Suisse on £3.3bn – no other financial adviser broke the £1bn mark.
