UK takeover deals drop to lowest level since financial crisis

The value of UK takeover and merger deals slid to its lowest level since the financial crisis over the past year amid the gloomy economic backdrop.

Mergers and acquisitions (M&A) including UK firms or funds totalled 265.4 billion US dollars (£207.6 billion) over 2023, according to new data from LSEG (London Stock Exchange Group) Deals Intelligence.

It represents a 33% slump against the same period last year and is the lowest figure since 2009.

The decline in activity has been blamed on a combination of higher interest rates and concerns over geopolitical tensions.

The year started with a particularly weak first quarter, which had been the quietest quarter for dealmaking since the end of 2009.

In total, there were 5,500 deals announced during the year, down 19% against 2022, as valuations were also weaker in the face of the challenging economic backdrop and a number of distressed sales.

Private equity firms announced about 41.4 billion dollars (£32.4 billion) worth of deals targeting UK companies during the year, with takeovers such as Apollo’s buyout of Wagamama owner, The Restaurant Group.

The largest deal with UK involvement announced so far during 2023 was the proposed 14 billion euro (£12.2 billion) move by Permira and Blackstone to buy classifieds firm Adevinta.

Lucille Jones, senior manager at LSEG Deals Intelligence, said: “Steeply rising interest rates and a concerning outlook for the UK economy, combined with stricter antitrust enforcement and ongoing geopolitical tensions curbed the appetite for deal making in 2023.

“M&A involving UK companies declined 33% to the lowest level in 14 years, with double-digit percentage declines for both the domestic and cross-border deal categories, and across all sectors.

“On a positive note, the year ended more strongly than it began, and with inflation coming down and rates normalising, it could give CEOs and boards a little more confidence with which to plan their moves in 2024.”