Deal-makers ‘may face slowdown after blisteringly-hot 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.
But data from the Office for National Statistics (ONS) released in December showed that the value of domestic M&A transactions was just £3bn in the third quarter of 2018.
This marked a drop of £9bn 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.
“We’re also starting to see banks, who have previously been bullish in offering generous debt packages to support transactions, start to tighten their stance and terms on offer in recent months.”
2018 was another year of change for the grocery sector, with Leeds-based Asda and Sainsbury’s announcing their shock plans for a merger in April.
The move followed a string of tie-ups in the industry, including Tesco’s acquisition of Booker last year and Amazon’s buyout of Wholefoods.