Dealmaking involving British firms hits highest since the millennium

A spate of large deals drove the strongest start to the year for British merger and acquisition (M&A) volumes since the millennium, according to new data.

M&A activity with UK involvement rose to $274.9bn ((£196.4bn) in the first quarter, its highest since the year 2000, figures from Thomson Reuters shown to City A.M. reveal.

Deal numbers in the first quarter fell by a fifth year-on-year, but big-ticket tie-ups between GlaxoSmithKline and Novartis, GKN and Melrose, and UBM and Informa helped to boost total activity to an 18-year high.

Read more: Dealmakers expect M&A to keep rising after 2018 starts with a bang

The stronger global economy has also aided firms to start looking for offensive growth opportunities.

Outbound M&A deals, where British firms snapped up operations abroad, grew by a fifth year-to-date to hit their highest since 2007 at $55.4bn

Meanwhile inbound deals rose to an all-time high of $158.7bn, after weak runs at the start of 2016 and 2017, although the announcement of the delisting of Unilever shares in London in favour of a single share listing in the Netherlands was the biggest contributor to the surge.

Read more: “Extraordinary surge” in M&A continues into 2018

Stripping out the effects of the Unilever restructuring, inbound M&A still reached its highest level since 2015 for the first quarter, and the second-highest since the financial crisis.

Alan Bainbridge, a London-based partner at law firm Norton Rose Fulbright, said the strength of M&A activity was being driven mainly by a combination of abundant private equity dry powder alongside the availability of cheap finance for firms.

Private equity has got so much money available that they’re jumping at everything at the moment,” he said. “There are more buyers for every asset than we’ve seen in the market for a long time.”

A strong pipeline of activity suggests the flow of deals will continue, he added.

Read more: UK M&A dealmakers ramp up US acquisitions in second half of 2017

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