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This Market Tracker trend report provides in-depth analysis of the 66 firm and 45 possible offers made for quoted companies subject to the Takeover Code in 2019. It includes insight into public M&A trends and what we might expect to see in 2020 and beyond.

Topics covered include:

• deal value and volume

• private equity deal activity

• hostile takeovers and competing bids

• industry focus

• UK and foreign bidder activity

• shareholder activism

• post-offer undertakings and national security undertakings

• legal and regulatory developments

• analysis of high profile transactions, including the Takeaway.com/Prosus competing bids for Just Eat, Advent International‘s £4bn offer for Cobham, the £2.6bn consortium bid for Inmarsat, and Non-Standard Finance ‘s £1.3bn hostile offer for Provident Financial

Report highlights

Public M&A deal volume increased significantly in 2019 (66 firm offers) compared with 2018 (42 firm offers). However, this was offset by a decline in deal value, with aggregate deal value of £53.6bn (2018: £122.1bn) and average deal value of £812m (2018: £2.9bn).

Of the 66 firm offers announced in 2019, 13 (20%) had a deal value over £1bn. The largest deal was Takeaway.com ‘s £6.3bn offer for Just Eat, which was also the subject of a £5.5bn competing bid from Prosus.

2019 saw record levels of P2P activity with private equity buyers involved in 48% of firm offers announced during the period, with an aggregate deal value of £25.7bn (2018: £8.4bn). Private equity also showed an increasing willingness to engage in consortium or ‘club’ deals to bid on larger transactions and reduce their risk exposure on M&A transactions.

Shareholder activism continued to be a feature of M&A activity in 2019. This took several different forms, including shareholders urging boards to seek merger partners (Just Eat and Merlin Entertainments), being vocal in their opposition to a takeover bid (Provident Financial and Just Eat), agitating for government intervention on takeovers (Cobham) and engaging in ‘bumpitrage‘ (Ophir Energy and Tax Systems). On the consortium bid for Inmarsat, activist shareholders sought to frustrate the transaction by challenging the scheme in the High Court.

Computing & IT was the most active industry sector, but Financial Services, Pharmaceuticals & Biotechnology, Engineering & Manufacturing and Media & Telecommunications also saw high levels of activity.

Weak sterling appears to have contributed to continued interest from non-UK bidders, in particular from US buyers. Of the 66 firm offers announced in 2019, 73% were made by a non-UK bidder. US bidders took advantage of a strong dollar and were involved in 18 (27%) of the firm offers announced in 2019 with an aggregate deal value of £3;10.2bn.

The report considers a number of legal and regulatory developments that took place in 2019, including the High Court ‘s dismissal of a class action brought by a group of Lloyds shareholders against the bank ‘s directors in connection with its purchase of HBOS in 2008/09, the coming into force of the Prospectus Regulation and the cold-shoulder ruling against Mr David King regarding the Rangers mandatory offer. The report also discusses various competition/anti-trust developments, including record fines imposed by the Competition and Markets Authority for merger control breaches, the impact of amended merger control thresholds for transactions impacting national security and the CMA ‘s proposals for a mandatory merger control regime.

The report contains expert commentary from:

• Giles Distin, Louise Pritchard and Simon Wood, Addleshaw Goddard

• Simon Allport, Bird & Bird

• James Bole and Rui Huo, 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

• Gillian Fairfield, Slaughter and May

• Tom Matthews, Dominic Ross and Patrick Sarch, White & Case

   

  Click here to download a PDF copy of the report.