City M&A col­lapses to low­est level in over a decade

The Daily Telegraph - Business - - Front Page - By Lucy Bur­ton

‘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.

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