Signs of upturn in M&A activity

John Longstaff
John Longstaff
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The uncertain outlook for the UK economy continued to have an impact on merger and acquisition (M&A) activity in this region in 2010.

However there are signs that M&A activity is experiencing an upturn in 2011 as the number of reported transactions has increased since January. The focus in this review last year was on disposals, whereas this year transactions are heavily biased towards acquisitions and a substantial private equity deal.

The highest ranked company in the Top 100 to complete a transaction was Gilder Group. The motor dealership group completed the acquisition of Heron Newark adding to the group’s impressive geographic footprint with the Volkswagen brand.

In December 2010, GRI Group announced the acquisition of Libra Chemicals. GRI specialises in providing products and services in the personal care, household care and industrial sectors of the chemical industry. Libra Chemicals is an excellent fit with this business, providing synergy benefits across the product range and geographical territories served by the group.

The founding shareholders of rapidly expanding retailer, Go Outdoors, were advised by BHP Corporate Finance when the company secured a private equity investment from 3i. Go Outdoors currently operates from 30 stores across the UK and plans to accelerate expansion to 70 stores in the next 4 years. The value of the investment was £28 million making it the most substantial reported transaction in the period.

In November 2010 B2net announced that it had acquired Essant for an undisclosed sum. This was followed in April 2011 by Proact IT Group, the Swedish based IT integrator, announcing that it had acquired a 75 per cent stake in B2net for £12 million which equates to a seven times earnings before interest and tax multiple.

Acquisitions were also carried out recently by Billington Holdings and Danieli Davy Dissington.

It is pleasing to report that the level of M&A activity has increased in the first quarter of 2011. This trend is forecast to continue throughout the remainder of 2011.