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Value of M&A deals of US companies targeting UK businesses up 115% to £79bn despite Brexit

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The value of M&A deals where US companies are buying UK businesses has more than doubled in the last year from £36.8bn in 2016/17 to £79bn in 2017/18, says Moore Stephens, the Top Ten accountancy firm.

Moore Stephens says US takeovers of UK companies, unlike their European rivals, have shrugged off Brexit concerns and continue to see good value in UK business. This has been in part due to the devaluation of sterling since 2014, making British businesses comparatively cheaper than many of their foreign competitors.

In contrast to US-led M&A deals in the UK, takeovers of UK businesses by EU companies has fallen by 5% in the last 12 months to £13.3bn from £14.1bn.

Moore Stephens says this may be because Brexit has been perceived more negatively on the continent by politicians, business groups and the media than in the US, making European businesses more cautious about acquiring UK companies.

The doubling of US investment into the UK comes despite expectations that many US companies would reduce outward investment following the recent Trump tax reforms. New rules encourage firms to repatriate cash they hold overseas to the US as well as incentivising inward rather than outward investment. Previously, cash held outside the US had been used to fund overseas M&A.

Moore Stephens says the confidence that US investors have placed in the UK is indicative of the underlying strength of UK businesses and the openness of its economy.

This has been demonstrated recently with Coca Cola’s planned purchase of coffee giant Costa Coffee from Whitbread for £3.9bn and Insurance broker Marsh & McLennan’s £4.3bn deal to buy UK insurance company Jardine Lloyd Thompson.

Some of the tech companies announcing plans to purchase UK businesses in the last 12 months include:

  • Music app Shazam has been bought by Apple for £299m
  • UK-based social business network Huddlewas acquired by private equity firm Turn/River Capital for £284m
  • Trading and investment software company Fidessa was taken over by Temenos GroupAG for £1.3bn

Damian Ryan, Partner at Moore Stephens, says: “Britain’s businesses continue to be some of the most attractive investment opportunities across the globe. It is a market too big to ignore.

“Whilst Brexit has created uncertainty, the underlying strength of UK businesses means that they continue to be great investment opportunities for overseas investors. US investors are the ones taking advantage of this right now.

“Britain is home to many of Europe’s most innovative and fast-growth businesses which will still be highly attractive to large multinational corporations after Brexit.

“The decline in EU-led M&A deals is possibly understandable given their proximity to blanket Brexit media coverage and the potential complexity of future trade with Europe. However, there is a risk that they have missed out on excellent investment opportunities, particularly given the weakness in sterling.”




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