Despite big deals, data shows activity slowed after Brexit

Updated: 2016-09-14 17:10

(China Daily UK)

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Britain's vote to leave the European Union took deal-making involving British companies to its lowest level for at least two decades as bosses grappled with what Brexit will end up costing, according to Reuters.

New figures show how Brexit and wider global uncertainties affected the behavior of chief executives and the teams of bankers, lawyers and advisers who make money from buying and selling companies.

Headline-grabbing deals, such as the 24.19 billion pounds ($32 billion) bid by Japan's SoftBank for Britain's most valuable technology company, ARM, make it appear that all is well in the world of mergers and acquisitions. But aggregate numbers paint a different picture.

The number of deals involving UK companies fell to 707 in the 11weeks after the Brexit vote. They had a total value of 66.12 billion pounds. This was down from 1,060 deals worth 94.72 billion pounds for the same period last year, according to Reuters.

While the total value of deals in which British companies were targets rose modestly to 34.66 billion pounds from 34.57 billion pounds during the period, the number was bolstered by the Soft-bank-ARM deal.

The number of deals involving British companies and the number of deals in which British companies were takeover targets were both at their lowest level for two decades.

"There is no doubt about it: M&A activity has declined," said Tim Gee, a London-based M&A partner at the law firm Baker & McKenzie."You see very significant caution. There is still a reasonable amount of activity by outside investors buying into the UK but there is very little UK-to-UK activity."

The Brexit vote triggered the deepest political and financial turmoil in Britain since World War II and the biggest ever one-day fall in sterling against the dollar.

In another development, UK inflation held steady at 0.6 percent in the year to August, figures showed on Tuesday, a move that surprised many who expected a further pick-up in the wake of the pound's drastic fall following the Brexit vote.

The Office for National Statistics said cheaper food and non-alcoholic drinks helped to offset an increase in transportation costs and restaurant and hotel bills. The unchanged consumer prices index was a mild surprise and the pound fell 0.5 percent to $1.3265.