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Article by Amanda Ansari.
Introduction
There is anticipation that UK public M&A activities are going to continue to grow strategically for the remainder of 2021 when in fact there had been a drop in the activities when the Covid-19 Pandemic first hit. Therefore, key statistics and developments regarding UK public M&A deals which are governed by the UK City Code on Takeovers and Mergers also known as the Takeover Code will be considered below.
Key Trends and Developments
The pandemic has had a huge impact on the volume of firm offers that had been announced in the first half (H1) of 2020, although a comparison of the number of deals in the second half (H2) of 2020 and the (H1)of 2021 demonstrates a steady return to pre-pandemic levels of activity. This shows 28 firm offers in H1 2021 compared to 26 offers made in (H2) 2020 and lastly 13 offers in (H1) 2020.
Considering continued uncertainty caused by the pandemic which led to the disruption of the necessary formalities such as shareholder meetings and court hearings essential to approve takeovers, we continued to see a rise in M&A activity during (H1) of 2021. As the global economy resumes to recover from the pandemic, it is predicted that for the (H2) of 2021 that an upward trajectory will continue to rise.
In terms of deal value, it can be seen that in (H1) 2021 the deal values were more evenly spread especially in respect to larger deals with seven transactions valued over 1 billion pounds. By contrast the first half of 2020 was mainly dominated by low value deals with 12 deals valued below 500 million pounds of which only one deal was valued at one billion pounds. This upward trajectory of higher value deals has continued into (H1) 2021. As mentioned, this steady increase in public to private transactions may indicate that this trend of more high-value deals may continue throughout (H2) 2021.
M&A and the Technology Industry
Although the pandemic has had a consistent impact on deal activity in some industry sectors for example in the travel sector, the deal activity may remain low as the travel restrictions are mostly still in place. However, in certain other sectors, such as the technology industry the activity appears to have increased, accounting for 36% of all offers in (H1) 2021 versus 15% of that in (H1) 2020.
One of the noteworthy technology acquisitions of this year was made by Zoom, the videoconferencing application. Zoom purchased the contact centre technology provider Five9 for 14.7 billion dollars in an all-stock transaction. This has been Zoom’s biggest acquisition to date and will help compliment their cloud based enterprise phone system that they launched in 2019.
P2P Activity
The key developments and highlights in relation to public to private (P2P) transactions has seen a major rise over the past year with P2P transactions accounting for 50% of firm offers (H1) 2021 and 71% of the deals valued above 1 billion pounds. This extraordinary rise in P2P activity undertaken in the light of COVID 19 and a cautious approach adopted by corporate buyers has been driven by a number of reasons. This includes the attraction of certain cash exit for investors in uncertain equity markets. This suggests that P2P transactions will remain a trend for the remainder of 2021.
https://www.skadden.com/insights/publications/2021/07/uk-public-ma-update-h1-2021
https://www.computerworld.com/article/3605102/noteworthy-technology-acquisitions-2021.html
