North West manufacturing M&A up
NORTH WEST manufacturers saw an increase in M&A activity in the second quarter compared to the first three months of the year – a trend not seen anywhere else in England.
Analysis by law firm Irwin Mitchell of data provided by Experian, the global information service, shows that the number of manufacturing deals involving North West companies in Q2 rose by 23%.
The region was the only one in the England to see an increase in deal numbers and the volume of transactions that were completed was second only to London and the South East.
Despite the increase, the total number of deals completed so far this year across the region is well below the figure recorded in the first half of 2014 – in fact it is lower than any period covered by the report since 2008.
North West companies’ share of manufacturing deals across England fell to 11.3% compared to last year when it is was 12.9%. The region compares favourably however to Yorkshire where the share is just 8.5%.
The level of deal activity amongst Yorkshire-based manufacturing companies was down by almost a third when compared to levels seen in the North West after the first six months of the year.
Significantly, North West manufacturing companies were the subject of only 8% of the sector deals which were backed by private equity. This is the lowest level since 2012 and is half the amount it was last year.
The position in the North West mirrors the national picture where the number of private equity backed transactions in the sector fell considerably from 14 to 10. Only 9% of manufacturing deals completed during the six months of 2015 were financed through private equity – the lowest proportion since 2012.
The latest statistics in region follow a disappointing set of output figures for the sector. Announced at the beginning of July, official figures from the Office for National Statistics (ONS) show that production levels in the manufacturing sector fell for the second month in a row in May.
ONS said output fell by 0.6% following a decline of 0.4% in April. Manufacturing in the three months to May was 4.6% below its level at the start of the recession in 2008.
Andrea Cropley, partner and head of corporate at Irwin Mitchell in the North of England, said: “The increase in deal numbers in the North West is good to see because generally deal activity in the sector has stalled, reflecting the national picture and also the general fall in output across the sector. Private equity interest has reduced substantially and I expect that it will remain so until the sector as a whole shows signs of consistent improvement.
“There are signs of improvement though and although the overall manufacturing sector is facing numerous challenges, there are plenty of sub sectors that are booming and I expect that this will fuel greater M&A over the coming months. Our deal pipeline looks strong for the rest of 2015 and I remain optimistic.”
Nationally, M&A activity in the sector in the first half of the year stood at 257 – 10% lower than the same period in last year.
