The total cost of domestic deals that involve more than one UK companies has decreased to £500m during the last quarter of 2012. This is the lowest point registered for the last 20 years. The figures come directly from the Office for National Statistics which claim that the main reason for the record low is the low activity UK companies demonstrate due to the unstable economical climate and the tendency to stay away from risky deals.
The Office for National Statistics added that the significant decrease is proof that UK companies have adopted a more cautious approach in order to avoid deals that may cost them a lot. The low confidence of the corporate sector has led to a massive drop in the amount of deals that involve UK companies. The number of deals was 79 in the second quarter of the year and just 47 in the third one.
The ONS’ statement read: “The decline in M&A activity may be evidence that UK companies now prefer a more cautious approach due to the current economic climate”. The statistics also held data about the M&A activity which includes foreign and UK companies. This activity has risen during the past couple of months despite the smaller number of transactions. The ONS said that the fewer transactions were larger, so the low activity shouldn’t be worrying.
The number of transactions of foreign companies in the UK has also decreased significantly to just 31. However, the amount if acquisitions increased by £2.5bn for the same period. The figures released by the ONS show that the largest deals included CGI’s purchase of Logica which cost them £1.7bn, PTT Exploring acquiring Cove Energy for £1.2bn and the £1.1bn deal which turned Charterhouse Nadia 1 in a part of H&F Lux Holdco.