Deal-making at UK companies declines in first quarter

The number of takeovers involving British companies slumped in the first quarter of the year, figures have revealed.

Mergers and acquisitions were down across the board in terms of both the number of deals and their value between January and March 2019, according to the Office for National Statistics (ONS).

The biggest drop was recorded in the value of foreign companies buying UK firms, the total of which was £6.3 billion compared with £38.8 billion in the prior quarter.

In the same period last year, £25.5 billion worth of deals closed.

More than half of this year’s first quarter total was accounted for by Coca-Cola’s £3.9 billion takeover of Costa Coffee, which was announced last August and completed in January.

British companies also reduced their M&A activity, both at home and abroad.

Takeovers of foreign companies were valued at £5.4 billion in the quarter, down by almost half from the £10.5 billion worth of activity in the previous period and lower than the £6.1 billion recorded this time last year.

The period included GlaxoSmithKline’s £4 billion acquisition of the US’s Tesaro.

Domestic deals reached just £1.4 billion, the lowest value since the final two quarters of 2015.

It marked a decline from £5.6 billion in the final quarter of 2018 and a notable decrease on the £7.2 billion of 2018’s first quarter.

Mark Collings, chief commercial officer of debt finance platform CODE Investing, said the figures showed the “brutal” impact of Brexit.

“M&A activity is a barometer of business confidence and on this evidence the impact of Brexit in the first three months of the year was nothing short of brutal,” he said.

“If proof were needed that Brexit has caused major corporates to put big decisions on hold, then the bleak M&A data for the first quarter is it.”