Transaction to take majority stake in Leeds-based Asda was region's biggest deal in 2020

The number of corporate deals completed in Yorkshire suffered a sharp fall in 2020, as the pandemic took its toll on economic activity, according to a new study.

Library image of a sign at an Asda store.

The Experian M&A Review 2020 concluded that deal volume in Yorkshire dropped by 19% from 665 in 2019 to 538 last year, which is the lowest number since 2015.

However, a strong second half of the year offset some of the early losses in a pattern that was repeated across the UK.

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The report said: “There were 250 transactions announced up until June, but this increased to 288 deals in the latter half of the year.

“At the same time deal values spiked from just short of £8bn in 2019 to £11.6bn this year, a very healthy 45% increase. Yorkshire and Humber-based companies were involved in 9.2% of all UK deals in 2020 and contributed 3.3% to their total value.”

Rights issues dominated the top deals for the region within the first six months of 2020, as companies conducted placements to raise cash for working capital in the wake of Covid-19 disruption.

The report added: “However, acquisition and buy-out activity was much stronger as the year progressed, with the largest deal announced seeing a consortium comprising the Issa brothers, the Blackburn-based entrepreneurs behind forecourt and convenience retailer EG Group, and TDR Capital, the private equity firm, agree to acquire a majority shareholding in Asda Stores, the Leeds-based retail subsidiary of Wal-Mart Stores.”

Commenting on the national picture, Jane Turner, the research manager, at Experian MarketIQ, said: “The resilience of the UK’s mergers and acquisition market was clear to see in 2020, with dealmakers seemingly quick to adapt to the logistical difficulties of completing transactions in the Covid-19 era.

“After a hiatus in the second quarter of the year, deal volume approached pre-pandemic levels in Q4. A flurry of multi-billion pound acquisitions towards the end of the year meant that annual transaction value eventually eclipsed that of 2019, a really startling recovery.

“Tech deals had already started to dominate the UK’s M&A landscape in recent years, and our enforced move to a more online existence looks to have only accelerated that process.

“Meanwhile, having spent time taking stock and shoring up the capital positions of their portfolio companies in the immediate aftermath of lockdown, the private equity sector played an increasingly key role on the buy-side in the last two quarters of 2020.

“We would expect this to continue as we move further into the new year. However, whether the wider market will undergo any dampening effect due to January’s third national coronavirus lockdown in England remains to be seen.”

The deals team at professional services firm EY also reported that the Yorkshire and North East deals market remains buoyant, despite the pandemic.

It has also been revealed that EY’s Yorkshire and North East Transaction Services team acted on deals totalling more than £4bn in 2020.

The team acted on 21 completed deals in 2020, with highlights including listed chemical business Croda’s acquisition of Spanish fragrance manufacturer Iberchem in November and the initial public offering (IPO) of IT security and cloud business Bytes Technology Group in December.

The volume of activity across the technology sector was notable last year, according to Ben Coggin, Strategy and Transactions Director in EY’s Leeds office and Transactions Technology.

Mr Coggin said: “The gaming industry remains fragmented and, with new entrants joining the market, M&A activity is increasing as corporates look to maintain market share and secure skills in an increasingly competitive talent pool.

"The sector is also attracting the attention of private equity as an increasingly rich gaming ecosystem offers opportunities to develop new revenue channels.”