Mega deals make their mark with increase in 2012

LAST year was the most active for “mega deals” in the UK since 2009, with a 15 per cent hike in the number of very large transactions.

The number of “mega deals” worth more than £1bn announced in 2012 increased from 34 in 2011 to 39 – worth a total of £128bn.

Deals in Yorkshire fell by 3.2 per cent to 323, with their combined value dipping 1.2 per cent to £2.5bn, business data firm Experian said.

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Most of the mega deals spanned borders, including the £5bn acquisition of NDS Group, a Middlesex-based pay TV software firm, by California-based Cisco Systems, and the £4.6bn investment by US drugstore chain Walgreen Co in Nottingham-based chemist group Alliance Boots.

Across the UK the number of announced mergers, acquisitions, flotations, rights issues and share placings fell by three per cent, from 4,683 transactions in 2011 to 4,543 in 2012. This was mainly led by a decline in deal-making in the final quarter of the year, when volumes fell 11 per cent compared with the same quarter a year earlier. However, major deals boosted the total value of transactions by 4.8 per cent, from £231bn to £242bn.

Europe saw a 10.2 per cent downturn in deal volumes in 2012, accompanied by a 10.5 per cent fall in their total value.

Wendy Driver, business development manager at Experian UK and Ireland, said: “Despite the challenges faced by the Eurozone crisis, the UK has proven to be one of the most attractive markets in what has been a subdued year for mergers and acquisitions globally.

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“The quality of UK businesses and assets, as well as favourable interest rates, has been consistently attractive to overseas investors which is helping to keep mergers and acquisitions activity buoyant and may serve to boost confidence further.”

The volume of UK transactions funded by bank debt increased
by 11.6 per cent year-on-year to 309.

Mid-market deals in the UK, worth between £10m and £100m, were the worst affected, with volumes down by 6.2 per cent year-on-year. Small and large deals remained relatively static.

Northern Ireland enjoyed a boom year, with deal volume up by 36.8 per cent, as did Scotland, up 10.5 per cent.

The most active sector in the very large deals segment was food and beverage manufacturing with 15.4 per cent of transactions.

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