Scots firms target US peers as M&A activity gets a lift
● New study highlights swoops by Wood Group, Aggreko and William Grant in H1
Scottish companies have been busy swooping on their American counterparts, according to a new study that shows investment in US firms by businesses headquartered in Scotland running at a twoyear high.
Deloitte’s latest US/UK M&A Deal Monitor found there were six deals completed in the first half of this year, higher than any other six-month period since the firm started trackingtransactionsbetween the two countries in 2015.
It comes despite concerns that the bulk of M&A activity is streaming in the opposite direction as overseas predators swoop on British businesses amid a slump in the value of the pound following last June’s Brexit vote.
Among the most recent deals highlighted by accountant and business advisor Deloitte were Aberdeen-based Wood Group’s acquisition of CEC Controls Company for some £45.5 million, Glenfiddichmaker William Grant & Sons’ purchase of Tuthilltown Spirits, and Glasgow-based Aggreko buying Tuco Industrial Products.
There were also two deals involving US acquirers and Scottish companies in the first six months of 2017 – TSG Consumer Partners bought a 23 per cent stake in Ellon-based craft brewer Brewdog while Philadelphia-based Axalta Coating Systems purchased Aberdeen’s Spencer Coatings.
Since the third quarter of 2015, US companies have invested in Scottish businesses on 25 occasions, while there have been 16 transactions going in the other direction, according to Deloitte.
Cahal Dowds, partner and vice-chairman of Deloitte UK, said: “The very high costs associated with operating in London and the south east [of England] are driving many businesses out of the region.
“Dealmaking is beginning to reflect this pattern for regionalisation, with a very gradual increase in the share of deals done in Scotland, as well as the east of England and the Midlands. Manufacturers, in particular, are choosing to locate or add investment in Scotland and the West Midlands.”
Manufacturing has been the most active sector north of the Border over the past couple of years, with a total of ten deals – seven involving US acquirers and three from Scotland. The technology, media, and telecommunications (TMT) market was second with eight transactions.
The total value of merger and acquisition deals between the US and the UK increased from $20.1 billion (£15.4bn) in the first half of 2016 to $36.6bn this year.
The value of acquisitions from the UK into the US was $28.8bn, nearly seven times the $4.2bn reached in the first half of 2016. However, the value of US acquisitions into the UK halved from $15.9bn to $7.7bn in the first six months of 2017.
Dowds added: “Despite momentum from continuing uncertainty, M&A between the US and the UK has remained robust and one of the world’s largest deal corridors by value.”