- The volume of U.K. domestic deals this year surged to $68 billion from $34.3 billion in 2016
- The number of deals between British groups jumped from 1,480 to 1,681, the highest level since 2008, the data show
- Still, inbound and outbound M&A fell in 2017, leading to an overall dip from 2016
Companies seeking to "bulk up" to offset the uncertainty caused by Britain's looming EU exit helped to spur a near doubling of domestic mergers and acquisition activity this year, according to Thomson Reuters data.
DATE IMPORTED:June 19, 2016Participants holding a British Union flag and an EU flag kiss during a pro-EU referendum event at Parliament Square in London, Britain June 19, 2016.Neil Hall | Reuters
The volume of U.K. domestic deals this year surged to $68 billion from $34.3 billion in 2016 as the number of deals between British groups jumped from 1,480 to 1,681, the highest level since 2008, the data show.
They included online gambling company GVC's purchase of bookmaker Ladbrokes Coral for as much as 3.9 billion pounds ($5.24 billion) and Hammerson's 3.4 billion pound acquisition of rival shopping center operator Intu Properties.
It comes against a backdrop of often fractious Brexit negotiations between London and Brussels this year, talks that are yet to provide businesses with clarity about Britain's future relationship with Europe.
Bosses at British companies have also been watching new U.S. President Donald Trump, whose decisions have repercussions for businesses around the world.
"At the beginning of 2017 there were a lot of questions about what was going to happen to the M&A market, given the global uncertainty caused by Brexit and the new U.S. president," said Nick Cline, a London-based M&A partner at law firm Latham & Watkins, who said the uncertain environment had acted as a driver for some deals rather than stifling activity.
"There are a lot of corporates out there in the U.K. and Europe who are seeing the changing landscape and as a result are even more focused on what they're going to do to be tomorrow's leaders."
The jump in domestic deal-making contrasted with falls in both inbound and outbound U.K. M&A volumes, the data show, with the former slipping 12.9 percent to $115.1 billion and the latter down 9.4 percent to $112.5 billion.
That meant overall M&A volumes with any U.K. involvement dipped 0.7 percent to $375 billion, a softer decline than the 1.4 percent slide in global deal volumes to $3.5 trillion, according to the data.
Philip Noblet, HSBC's co-head of global banking in the U.K., said that "a lot of the obvious sector consolidation deals that people expected to happen" were struck this year and were "driven by the Brexit climate which is prompting companies to bulk up."
However, a dearth of blockbuster deals meant that overall M&A volumes involving any British companies remained much lower than in 2015, when they totaled $605.5 billion, swelled by Anheuser-Busch Inbev's $110 billion acquisition of FTSE 100 brewer SABMiller and Royal Dutch Shell's $53 billion tie-up with BG Group.
"It's hard to see how any more of the really big deals are going to happen going forward without there being quite significant competition issues," said Noblet.