City M&A collapses to lowest level in over a decade
‘Although relatively few deals have been announced yet we sense a strong level of underlying interest’
THE City has lost its dealmaking swagger after the coronavirus pandemic and Brexit jitters dragged takeover activity to the lowest level in more than a decade, insiders have warned.
Boardrooms are snubbing deal talks to focus instead on keeping their businesses afloat during lockdown, lawyers and bankers said – dragging the number of takeovers happening in Europe to its lowest level since 2004, according to data provider Refinitiv.
Ian Hart, UBS’s co-chairman of UK investment banking, said: “The initial impact of the Covid crisis was to put deals on hold while companies and sponsors assessed their own situations.
“However, although relatively few deals have reached announcement in the UK yet we sense a strong level of underlying interest.”
Britain’s mergers and acquisitions market has not been this quiet since the aftermath of the financial crisis in 2009, and fears are growing that the Square Mile will struggle to win back business after a brutal blow from the Covid crisis and as Brexit jitters keep activity in the deep freeze.
Nick O’Donnell, a lawyer at Baker McKenzie, said it feels like businesses are “preparing for possible storms ahead” with deals being tabled “measured and thought-through rather than emotional”.
Dwayne Lysaght – joint head of European dealmaking at JP Morgan, one of the advisers to Liberty Global’s $7.4bn (£5.6bn) agreement to buy Swiss telecoms firm Sunrise this week – agreed that bosses cannot afford any mis-steps and are taking a cautious approach to talks.
Jan Skarbek, head of UK investment banking at Citi, said deals in the coming months will come from large corporates offloading non-essential operations. Industry winners will also take the opportunity to pick off weaker rivals, he said.