Tuesday 04 June 2019 11:15 am

UK M&A value plunges in run up to March Brexit deadline

A Union flag flies from a pole as construction cranes stand near skyscrapers in the City of London, including the Heron Tower, Tower 42, 30 St Mary Axe commonly called the “Gherkin”, the Leadenhall Building, commonly called the “Cheesegrater”, as they are pictured beyond blocks of residential flats and apartment blocks, from east London on October 21, 2017. / AFP PHOTO / Tolga AKMEN (Photo credit should read TOLGA AKMEN/AFP/Getty Images)

The value of UK mergers and acquisitions plunged in the first quarter of this year as business confidence was impacted by the March Brexit deadline.

The value of deals that saw foreign companies buy UK firms fell 83.7 per cent compared to the fourth quarter of last year.

Deal values fell from £38.8bn to £6.3bn in the first three months of 2019 due to a lack of high valued transactions completed in the quarter, according to the Office for National Statistics (ONS).

The fall came in the lead-up to the original 29 March deadline for the UK to leave the European Union.

“If proof were needed that Brexit has caused major corporates to put big decisions on hold, then the bleak M&A data for the first quarter is it,” Mark Collings, chief commercial officer at Code Investing, said.

Notable transactions during the quarter include Coca-Cola’s acquisition of Whitbread and Norwegian firm DNO’s takeover of Faroe Petroleum.

The value of deals where UK companies bought foreign businesses also fell, dropping by £5.1bn to £5.4bn.

However, small and medium firms saw Brexit uncertainty as an opportunity for growth and M&A in the sector fared better than larger corporate firms.

“Many of the UK’s SMEs are looking at Brexit as an opportunity to grow and acquire market share rather than a reason to sit tight,” Collings said.

Daniel Domberger, partner at Livingstone, added: “M&A volumes are holding up quite nicely in this area as investors look to fulfil long-term strategic goals, and business leaders demonstrate clear growth trajectories.”