ONS confirms record year for UK M&A, more big deals seen in 2017

During 2016 the number of takeovers of UK companies reached the highest levels since 2011 and some analysts see 2017 as heralding even more if the pound remains weak.

From January through to December, not only were incoming deals at a long-term high, which included inward and domestic M&A, the amount of outward mergers and acquisitions involving UK companies declined to its lowest mark since 2013, the Office for National Statistics said.

In fact, in 2016 there were 227 successful inward M&A deals, which were collectively worth £187.4bn, the most since ONS first published M&A data in 1969.

The 400 domestic deals were valued at a total of £23.9bn, the highest value since 2009.

With that momentum maintained into 2017 with Kraft Heinz’s opportunistic bid for Unilever, this could be an even bigger year for M&A.

It is a clear impact of a weak pound making UK companies attractive, said analyst Neil Wilson at ETX Capital, adding that if pound is set for revival, as Morgan Stanley said on Tuesday, then this year would be the time for acquisitive corporates to get in the market.

"There’s got to be some big deals coming, particularly as the Trump trade fuels global equity rally, I think we’ll see more US firms looking to buy value and that is the UK," Wilson said.

"And as we saw with Snap – there is a wall of cash out there waiting to be spent on anything that looks remotely appealing. And we know how much cash the big US corporates have."

Other factors are at work as catalysts for deals, with the merger of Standard Life and Aberdeen Asset Management, as announced on Monday, due to a consolidation trend among active asset managers, following the example set by the UK-US coming together of Henderson and Janus.

Expect to see consolidation in the asset management industry continue, said analysts at Olivetree, with the above four fund managers "by no means unique" in the pressures they are facing from passive management strategies currently.

"Rationalisation of costs across this space is entirely sensible and likely to see other transactions announced in the coming months."