Record market close + Scottish deals

M&A activity still rising though risks emerge

Standard Life

Global hub: Standard Life HQ became home to a newly-merged business

Mergers and acquisitions activity around the world in 2017 pushed through the $3 trillion level for the fourth consecutive year and was headed in Scotland by the biggest ever deal between two indigenous companies.

The relatively weak pound is expected to spur more M&A activity in 2018. lt is also spurred by global economic growth, uncertainty over Brexit, subdued inflation in advanced and emerging economies, buoyant asset markets and historically low interest rates.

The Intralinks Deal Flow Predictor, with a proven track record for accuracy, forecasts that the number of worldwide announced M&A deals in Q1 2018 will increase by around 2% compared to Q1 2017.

Yet there are some indications of a weakening in activity. Notwithstanding data from Barclays indicating a greater willingness of growth firms to sell, early-stage M&A activity in the UK in the third quarter fell by 5% year on year and in Germany it fell by 8%, these being EMEA’s two biggest M&A markets.

A potential risk is that global equity markets are at record highs and therefore vulnerable to a correction. The S&P 500 has risen for 13 straight months to the end of November, an unprecedented streak. Global stocks, meanwhile, haven’t had a down month since October 2016, and even before December’s figures have been counted 2017 will be the year with the fewest monthly declines.

Europe has enjoyed double digit gains. Germany’s Dax is up 13%. While the FTSE 100 hit record highs this week, although the index is only 7.6% higher over the year. The FTSE 250, a broader measure of UK companies, is up 14.6% over the same period.

The blue-chip index closed today at a new record, up by 65 points (0.9%) at 7,687.77, repeating its record close on the last trading day of 1999.

The two leading US indexes have both risen by more than 20% so far this year. They have been further boosted by President Donald Trump’s sweeping tax reform. Under the changes, the US corporate tax rate will fall from 35% to 21% in 2018.

In Asia, the markets have enjoyed their best year since the aftermath of the financial crisis in 2009. The MSCI Asia Pacific Index, which tracks stocks across the region, has surged by almost 29% this year.

Hong Kong has enjoyed a stunning year – jumping by 36%, while South Korea posted a 22% gain and India rose by 27%.

Market buoyancy is a key factor spurring deals and the sectors most likely to see more M&A activity in the coming year are fund management, technology, energy.

At the micro level, there is an expectation that a consolidation is due among the craft brewers and distillers which have sprung up in recent years.

There is also a long-held view that more deals will be done in the media sector following Rupert Murdoch’s decision to sell much of his Fox Entertainment business and the pressures on the traditional revenue sources for print media. Trinity Mirror is pursuing Express owner Northern & Shell, while Johnston Press continues to be the subject of rumour and speculation.

In Scotland, the past year has seen a flurry of mergers among law practices, while the biggest deal of all involved two of its biggest fund managers.

Standard Life and Aberdeen Asset Management were forced to rush out confirmation of their plans for an £11 billion tie-up one Saturday evening in March after the news leaked.

The deal was completed in August, giving Scotland a new financial services giant that became the UK’s largest fund manager.

There was also activity in the energy sector, partly a result of government plans to cap rising consumer prices, a flight of customers to alternative suppliers and the growth of renewables. A merger of SSE’s household energy business with Npower will create a business second to Centrica, owner of Scottish Gas and should complete next year.

Among long-standing companies which surrendered their independence were Fishers Laundry, the law firm Maclay, Murray and Spens and the accountants Springfords and Campbell Dallas.

The deal that never was involved the proposed merger of FanDuel, established in Edinburgh, and its fantasy sports games rival Draftkings. FanDuel has been through a tough time with legal battles draining its resources. Daily Business revealed that it had decided against relocating to a new £50m development in Quartermile, Edinburgh. The company relocated its headquarters to New York.

There were three IPOs of Scottish companies in London, a rare uplift in the normal rate of flotations as boards saw an opportunity to hitch their wagons to rising stock market values. Daily Business revealed Glasgow-based Quiz Clothing’s plans to join the Alternative Investment Market and it was joined on the junior market by Springfield Properties and Beeks Financial.

Scottish M&A deals 2017 (click on links to read articles):

Standard Life merged with Aberdeen Asset Management
Value: £11bn
Advisers: Goldman Sachs, Fenchurch

Chrysaor acquired North Sea assets from Shell
Value: $3bn (£2.24bn)
Adviser / funder: Harbour Energy (EIG Global Energy Partners)

SSE announced merger of household energy business with Npower (talks ongoing)
Value: Undisclosed
Adviser: Credit Suisse

Wood Group acquired Amec Foster Wheeler
Value: £2.2bn
Advisers: JP Morgan Cazenove, Credit Suisse

Bridgepoint acquired Miller Homes
Value: £655m
Advisers: Moelis, KPMG, Travers Smith, Linklaters, Savills, Marsh, Rothschild, DLA, JLL, White & Case, Jamieson Corporate Finance

Element Materials Technology acquired Exova
Value: £620m
Adviser: Goldman Sachs and Investec

Quiz Clothing IPO
Value: £200m
Adviser: Panmure Gordon

3i acquired further equity in Wireless Infrastructure Group
Value: £186m
Adviser: Undisclosed

Greencoat UK Wind acquired Corriegarth Wind Farm
Value: £181m
Adviser: Undisclosed

Springfield Properties IPO
Value: £87m
Adviser: N+1 Singer

Hermes Investment Management buying Skypark (deal still to complete)
Value: £80m+ (est.)
Adviser: JLL

Danish billionaire Anders Povlsen acquired Jenners building from Glen Properties
Value: £55m
Adviser: CBRE

GLL Real Estate Partners Pan European Property Fund acquired Exchange Place 1
Value: £47m
Adviser: GVA James Barr

Wood Group acquired of CEC Controls Company, Detroit
Value: $59m (£44m)
Advisers: Undisclosed

TechnipFMC acquired well-head business of Plexus Holdings
Value: £42.5m
Adviser: Cenkos Securities, St Brides Partners

Wirefox acquired City Park (added to earlier deals for Capella, Rockford, Silvan House and Southergate Centre)
Value: £41m for City Park
Advisers: MacRoberts, DPL & Davidson McDonnell

Aggreko acquired Younicos
Value: £40m
Adviser: Alexa Capital

K-Bro Linen acquired Fishers Laundry Group
Value: £35m
Advisers: PwC corporate finance, Dickson Minto and Vialex

Wilsonart Engineered Surfaces (Texas) acquired Mermaid Panels and Shore Laminates
Value: £30m
Adviser:  EY, Shepherd + Wedderburn and Thorntons

UBS Asset Management acquired Quartermile 2
Value: £28.5m
Advisers: CMS Cameron McKenna Nabarro Olswang, Brodies and GVA.

AAC Microtec acquired Clyde Space
Value: £26.2m
Adviser: Nevis Capital

Beeks Financial IPO
Value: £24.5m
Adviser: Cenkos Securities

International Hotel Properties acquired Holiday Inn Express Picardy Place, Edinburgh
Value: £17.7m
Advisers: JLL and FRP Advisory

Macfarlane acquired Greenwoods and Nottingham Recycling
Value: £16.75m
Adviser: Arden Partners

L Catteron acquired 27.9% of Innis & Gunn
Value: £15m
Adviser: Noble & Co and Vialex

Menzies Distribution acquired EM News Distribution
Value: £3.6m
Adviser: Undisclosed

James D Bilsland – acquired Andrew Gray & Co
Value: £2.8m
Adviser/funder: Bank of Scotland

Marshall CDP acquired corner property, Blythswood Square, Glasgow
Value: £2.45m
Advisers: GVA, Paul Hamilton Chartered Surveyors

Future Publishing acquired Team Rock titles
Value: £800,000
Advisers: FRP Advisory (administrator)

Minoan acquired Morningside Travel
Value: £135,000
Adviser: WH Ireland, Throgmorton Street Capital, Morgan Rossiter

Cairngorm Capital Partners acquired Thornbridge Sawmills
Value: Undisclosed
Advisers/funders: BDO, Addleshaw Goddard, CIL, JLT, Grant Thornton, Wright Johnston & MacKenzie. PNC Business Credit, Clydesdale Bank

Starwood Capital Group acquired Abstract
Value: Undisclosed
Adviser: CBRE, Ryden, JLL, Lambert Smith Hampton, CMS and Pinsent Masons

Baldwins acquired Campbell Dallas and Springfords
Value: Undisclosed
Adviser: Vialex (for Springfords)

Anderson Group acquired Alloy Bodies
Value: Undisclosed
Adviser / funder: HSBC

Skyscanner acquired Twizoo
Value: Undisclosed
Adviser: BDO

Atlantis Resources acquired Simec
Value: Reverse takeover
Advisers: Evercore, Cantor Fitzgerald, Macquarie Capital

Lomond Capital acquired letting agents in Birmingham, Brighton and Manchester
Value: acquisition fund of £37.5m
Advisers included: Clydesdale Bank, Tosca Debt Capital,

Endless acquired Arran Aromatics
Value: Undisclosed
Advisers: KPMG (administrator)

Merkle acquired Aquila Insight
Value: Undisclosed
Advisers: GP Bullhound

Kiltane acquired parts of the Ness Clothing 
Value: Undisclosed
Adviser: BDO (administrator)

Cello Signal acquired Tanami Media
Value: Undisclosed
Adviser: Lindsays

Billy Walker acquired Glenallachie Distillery
Value: Undisclosed
Adviser: Macdonald Henderson

Cammach Recruitment acquired Bryant Group
Value: Undisclosed
Adviser: Hall Morrice Corporate Finance

Head Group acquired Change Recruitment
Value: Undisclosed
Adviser: FRP Advisory (administrator)

US investors headed by Chicago-based fund manager Richard H. Driehaus acquired Bonham Hotel, Edinburgh
Value: Undisclosed
Advisers: JLL

Dynamic Edge acquired Waytime
Value: Undisclosed
Adviser / funder: Bank of Scotland

William Grant & Sons acquired Tuthilltown Spirits in New York State
Value: Undisclosed
Advisers: Undisclosed

MB Aerospace acquired Asian Compressor Technology Services
Value: Undisclosed
Adviser: Undisclosed

Concept Life Sciences acquired Aquila BioMedical
Value: Undisclosed
Adviser: Undisclosed

Mark Cavanagh acquired Oil Plus
Value: Undisclosed
Adviser Undisclosed

Ogilvie Group acquired Active Auto Solutions
Value: Undisclosed
Adviser: Undisclosed

Deloitte acquired Market Gravity
Value: Undisclosed
Adviser: Undisclosed

Edwin James acquired Peterborough Electrical & Mechanical Engineering
Value: Undisclosed
Adviser: Undisclosed

Talon Business Solutions acquired Vozero
Value: Undisclosed
Adviser: Undisclosed

TV Squared acquired Wywy (Germany)
Value: Undisclosed
Adviser: Undisclosed

Ballantynes acquired the Edinburgh letting agent Ream
Value: Undisclosed
Adviser: Undisclosed

Menzies Distribution acquired London-based Gnewt Cargo
Value: Undisclosed
Adviser: Undisclosed

Ennismore acquired Bank of Scotland branch, St Andrew Square, Edinburgh
Value: Undisclosed
Adviser: Undisclosed

Entier acquired Wild Thyme
Value: Undisclosed
Adviser: Undisclosed

Edrington acquired Glenrothes Malt Whisky
Value: Undisclosed
Adviser: Undisclosed

Exova acquired SL Pharma Labs, Delaware
Value: Undisclosed
Adviser: Undisclosed

EnerMech acquired of EPS Group in Australia and the Americas
Value: Undisclosed
Adviser: Undisclosed

EnerMech acquired MInteg
Value: Undisclosed
Adviser: Undisclosed

Saint-Gobain acquired ScotFrame
Value: Undisclosed
Adviser: Undisclosed

Graham + Sibbald acquired Seymour & Co
Value: Undisclosed
Adviser: Undisclosed

TH Real Estate acquired Omni Centre
Value: Undisclosed
Adviser: Undisclosed

Liberty House Group acquired Shand Cycles
Value: Undisclosed
Adviser: Undisclosed

Staffline acquired Brightwork Recruitment
Value: Undisclosed
Adviser: Undisclosed

Aldomak acquired Handmade Meringue Company
Value: Undisclosed
Adviser: Undisclosed

Mosaic Architecture & Design acquired Burnet Bell
Value: Undisclosed
Adviser: Undisclosed

Arensis acquired Verdo
Value: Undisclosed (part of £50m UK-wide investment)
Adviser: Undisclosed

G1 Group acquired Scotsman Hotel
Value: Undisclosed
Adviser: Undisclosed

Netflix acquired Millarworld
Value: Undisclosed
Adviser: Undisclosed

1825 acquired Fraser Heath
Value: Undisclosed
Adviser: Undisclosed

Simec acquired Green Highland Energy
Value: Undisclosed
Adviser: Undisclosed

Legal sector mergers

Dentons acquired Maclay Murray & Spens

Watermans Legal acquired Wright & Co

Lindsays merged with Aitken Nairn

Gibson Kerr merged with Grange Solicitors & Estate Agents.

Mitchells Roberton acquired Adie Hunter

Wright, Johnston & Mackenzie BMK Wilson merge

Addleshaw Goddard completed its acquisition of HBJ Gateley

Mitchells Roberton and Kerr Barrie announced a merger

Allan McDougall Solicitors merged with McQueen Legal


ACA Press Cutters
Value: £6.5m
Advisers/funders: RBS/Lombard

Ice Factor Group
Value: £523,000
Adviser/funder: HSBC

Marmac Services
Value: Undisclosed
Adviser / funder: NatWest Bank, with advice from Chiene + Tait, Omnium Law and Kingsley Wood Solicitors

Value: Undisclosed
Advisers: Shoosmiths

Adams Consulting Group
Value: Undisclosed
Advisers: McLaughlin Crolla, Bellwether Green and BTO

Fife Fabrications
Value: Undisclosed
Adviser: Vialex, RBS

Value: Undisclosed
Adviser: Burness Paull

Value: Undisclosed
Adviser / funder: Clydesdale Bank



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