Brexit clouds gather over M&A market despite stellar 2018

DEAL-MAKERS shrugged off Brexit uncertainty in 2018 to complete a run of major transactions, but advisers have warned of a slowdown as March’s official exit day approaches.

The multibillion-pound sales of Costa, Pret A Manger, Sky and Shire were among the deals to hit the headlines in a buoyant market for mergers and acquisitions (M&As).

But data from the Office for National Statistics (ONS) released earlier this month showed that the value of domestic M&A transactions was just £3billion in the third quarter.

This marked a drop of £9billion compared with the previous period and was the first quarterly decline since the last three months of 2016.

“While the M&A market has remained blisteringly hot over 2018, the most recent data from the ONS seemed to indicate that deal volumes are starting to decline – perhaps a sign that boards are becoming more cautious as economic and political uncertainty continues to intensify,” said Jonathan Boyers, head of M&A at KPMG.

It was another year of change for the grocery sector, with Asda and Sainsbury’s announcing their shock £12billion merger in April. In the food and drink sector JAB Holdings took over Pret A Manger for £1.5billion, and rival coffee chain Costa was sold by Whitbread to Coca-Cola for £3.9billion.

The battle for Sky was won by Comcast, with a £30billion bid, while one of the biggest deals was Takeda’s £46billion takeover of Irish pharmaceuticals firm Shire.