Europeans take advantage of weak sterling
EUROPEAN companies are taking advantage of the weak pound to snap up UK businesses, according to Clearwater Corporate Finance.
The firm, which has its northern office in Manchester, said nearly two thirds of trade sales it handled in 2008 went to overseas – mainly European – buyers.
The value of sterling weakened throughout 2008 against both the dollar and the euro, with a dramatic 25% slump in value against the euro over the year.
During the year Clearwater advised on 26 deals with a total value of £650m, compared to 35 deals with a value of £780m in 2007 and 25 deals worth £470m in 2006.
Technology was the most active sector, accounting for almost a third of all deals, followed by support services (23%), industrial products (15%) and chemicals (11%). More than half of all transactions had some form of private equity involvement.
Key deals which Clearwater advised on during the year included the £140m sale by chemicals company Solvay of its Warrington-based Caprolactones division to the Swedish company Perstorp AB; the £129m management buyout of North Wales chemicals company Warwick International backed by Close Brothers Private Equity; and the sale of Auto Windscreens by Aviva to the German company Arques Industries AG.
Mike Reeves, partner at Clearwater’s Manchester office, said: “The number and value of deals was down in line with the slowdown in mergers and acquisitions, compared to the peak in 2007. However there has been no shortage of overseas buyers.
“Europeans in particular are making the most of the strong euro to acquire UK businesses at prices significantly lower than they would normally have to pay. Clearwater’s membership of the international M&A partnership IMAP gives us a strong presence in these markets and access to strategic buyers.”
Mr Reeves said he expected the market to “remain subdued”.
