Market Tracker trend report - trends in UK public M&A deals in H1 2020

Market Tracker trend report - trends in UK public M&A deals in H1 2020

This Market Tracker trend report includes in-depth analysis of the 12 firm offers and 10 possible offers announced in H1 2020 and provides insight into what to expect to see in H2 2020 and beyond.

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Topics covered include

  • deal value and volume
  • private equity deal activity
  • UK and foreign bidder activity
  • industry focus
  • deal structures
  • post-offer statements of intention
  • shareholder activism
  • coronavirus (COVID-19) issues and impact
  • legal and regulatory developments

Report highlights

The economic uncertainty caused by the coronavirus (COVID-19) pandemic has had a material impact on public M&A activity, with activity particularly reduced in Q2 2020.

There were 12 firm offers announced in H1 2020 compared with 33 firm offers in H1 2019 and 33 firm offers in H2 2019. Aggregate deal value was £2.6bn (H1 2019: £26.5bn; H2 2019: £27.5bn), which is the lowest half-yearly aggregate deal value for UK public M&A transactions since H1 2009. 

Although deal volume was significantly down, there was an increase in the proportion of firm offers that were public to private transactions with eight of the 12 firm offers (67%) involving private equity, family offices or individuals (H1 2019: 39%; H2 2019: 58%).

Given the decreased deal volume it is difficult to draw meaningful conclusions about industry sector focus when looking solely at firm offers. However, if both possible and firm offers are included, a trend emerges with twelve (54%) of the 22 possible and firm offers announced in H1 2020 being in the Technology, Media & Technology (TMT), Healthcare and Pharmaceuticals sectors.

In 2019 we saw overseas bidders take advantage of a weak sterling with 47 (71%) of the 66 firm offers involving a non-UK bidder with an aggregate deal value of £44bn, representing 82% of aggregate deal value in 2019. H1 2020 saw a decrease in overseas interest in UK quoted targets with non-UK bidders accounting for six (50%) of the 12 firm offers with an aggregate deal value of £679m, representing 26% of aggregate deal value during the period.

In addition to the impact on M&A deal volumes, the coronavirus pandemic affected public takeover transactions in a number of ways:

  • offer documentation included disclosures of the impact that the pandemic was having on current trading
  • some bidders qualified their post-offer intention statements in offer documentation to allow them to take mitigating action in the event of the pandemic causing a material worsening of the economic environment
  • one 2019 bidder announced that it was diverging from an earlier post-offer intention statement as a result of the impact that the pandemic was having on its business
  • Brigadier Acquisition unsuccessfully sought a ruling from the Panel allowing it to lapse its offer for Moss Bros on the basis of the impact that the pandemic was having on the target business
  • scheme meetings and court sanction hearings were generally held on a virtual basis
  • global competition authorities temporarily changed their merger control review procedures as a result of the impact of the coronavirus pandemic

The report considers a number of legal and regulatory developments in H1 2020, including:

  • the Corporate Insolvency and Governance Act 2020, which includes measures to facilitate the holding of general meetings virtually
  • the Competition and Markets Authority's decisions to block the completed JD Sports/Footasylum merger and approve the completed Just Eat/Takeaway.com acquisition
  • new powers introduced by the government to intervene on public interest and national security grounds

Market commentary

The report contains expert commentary from:

  • Giles Distin and Simon Wood, Addleshaw Goddard
  • James Bole, Lee Coney, Rui Huo and Katherine Moir, Clifford Chance
  • Alison Smith, Freshfields Bruckhaus Deringer
  • Selina Sagayam, Gibson Dunn
  • Leon Ferera, Jones Day
  • Iain Fenn, Nicole Kar and Dan Schuster-Woldan, Linklaters
  • Adam Cain and Julian Stanier, Pinsent Masons
  • Tom Matthews, Dominic Ross and Patrick Sarch, White & Case

Click here to download a PDF copy of the report

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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.