Average deal values soar to £20m
The value of international market transactions involving North West companies rose by 60% in 2016, according to Deloitte.
Statistics from the business advisory firm, in partnership with Experian Corpfin, show that despite the marked increase in spend, the number of transactions dipped 30% from 44 to 31 over the year, giving an average deal size of £20m, more than double the £9m seen in 2015.
The region’s listed companies were the most active in overseas acquisitions, with 58% of all transactions involving a plc buyer.
Significant deals over the period include the £140m acquisition of US pet pharmaceuticals developer Putney by Dechra Pharmaceuticals in March, while Arrow Global completed its £78m purchase of Dutch credit management services provider InVesting in April.
The fourth quarter of the year mirrored the annual trend, with the £162m spent by the region’s companies representing a 65% rise on the £98m spent in the corresponding period the previous year.
These figures were boosted by the £142m Chesnara acquisition of the Dutch arm of Legal and General, the provider of financial advisory services, though deals were also completed by NCC Group, Arrow Global and API Group.
The value of inbound investment remained stable at £1.5bn, though as with outbound M&A activity, deal volumes decreased by 30%.
As a result, the average investment made rose from £22m in 2015 to £32m last year. This includes the £681m acquisition of Innovia Group by Canadian manufacturer CCL Industries last month. In addition, the £300m purchase of Clarke Energy by US manufacturer Kohler saw ECI Partners sell its 30% stake in the company.
Consistent with prior periods, the statistics from Deloitte show that the US/UK M&A deal corridor remained a key driver of cross border M&A activity in the second half of the year, with 254 deals worth $126bn completed between the two countries.
Olly Tebbutt, director at Deloitte in the North West, said: “The relative strength of the US dollar compared to the pound is undoubtedly helping inbound M&A from the US from corporates taking a long term strategic view and seem undeterred by Brexit uncertainty.”
“In this low economic growth environment, M&A is an important driver of growth for companies with access to capital. Acquiring disruptive technology or processes, together with adding global reach has become increasingly important in recent years, and we continue to see these trends support M&A levels over the next 12 months.”
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