Weak pound encourages M&A activity in the UK

The drop in the value of the pound has made the acquisition of UK businesses more attractive to foreign buyers. Recent M&A activity was noted in various sectors, from entertainment to property as seen in the £3.3bn takeover of Entertainment One by the US toymaker Hasbro’s or Spain’s Ebro Foods acquisition of UK’s Tilda rice brand. M&A activity also seems to be on the rise at a purely national level as demonstrated by the recent talks regarding a deal between UK builder Bovis Homes and Galliford Try in respect of the latter’s Linden Homes and its partnership and regeneration businesses.

Although the weak pound might be good news for foreign buyers, other aspects should also be taken into account when considering a merger or acquisition of a UK business. The drop in the value of the pound raises the costs of imports for UK businesses and diminishes profits for group companies based outside the UK. From a legal perspective, a wide array of EU laws that would stop applying in the UK in case of a No-deal Brexit would also have to be considered.

If you are considering an M&A deal in the UK and need legal advice, please feel free to contact Harry Dronfield ([email protected]), Oksana Howard ([email protected]) or Raluca Sterian ([email protected]) on +44 (0)20 7354 3000.