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Deals and dealmakers

M&A activity falls in first half as CMS and RSM take top rankings

Alba owned by Chevron (Chevron pic)

Chevron’s North Sea sale was the biggest deal of the first half

Scottish M&A activity declined in volume by 10.5% to a total of 348 deals in the first six months of the year, compared to 389 in the same period last year, according to the latest data from Experian. Deal values dropped by 41% to £5.6 billion from £9.4bn.

Small cap deals were up 3% in volume on the previous period and accounted for just under 70% of the total number. Mid-market deals dropped by just over a quarter and large cap deals by 50%.

The two mega deals reported contributed more than half the value of the deals in H1 2019, worth just under £3bn collectively, although the two mega deals from H1 2018 were worth nearly twice as much.

Scotland accounted for 6.5% of all UK deal values and 10% of deal volumes.

Deals of the Half Year

The largest deal recorded was in the oil and gas sector, and saw North Sea oil and gas operator Ithaca Energy purchase of Chevron North Sea, for £1.6bn, adding a further ten producing field interests to its existing portfolio.

Ithaca is a wholly-owned subsidiary of Israeli integrated energy company Delek Group.

The acquisition of global engineering business, Howden Group, with its headquarters in Renfrew, was the second largest deal of the year. New York based private equity investor KPS Capital Partners, paid £1.4bn to acquire the company from US owner Colfax Corp in May.

In the third largest deal of the second quarter, Edinburgh-based waste management company Renewi sold its Canadian operations to Dutch investor Convent Capital for £64m in June.

Industry

Financial services was again the most active sector for M&A activity in Scotland, with a total of 243 recorded deals. Manufacturing was the second most active, represented by 41 deals worth £3.8bn. Professional services, infocomms and the wholesale and retail sector were the next most active.

With the exception of financial services, which saw growth of 1.3%, the professional services, infocomms and wholesale and retail sectors averaged a 36% decline on H1 2018 by volume. Only manufacturing and wholesale and retail saw increased values.

Funding

Where detailed funding arrangements were disclosed, just over 4% of all acquisitive transactions in the first half of the year were funded by bank debt, with the traditional high street lenders continuing to support Scottish companies keen to expand their business operations.

Just under 9% of deals were funded by private equity, with three of the top ten deals recorded for the year to date securing investment from overseas private equity firms.

Advisers

CMS retained top position as most active legal adviser in the first half of the year, having advised on six deals, worth £687m, including sell-side advice for bus and coach manufacturer Alexander Dennis on its sale to Canadian bus manufacturer NFI Group for £32m.

DWF and Addleshaw Goddard each advised on five deals. Baker Botts, Kirkland & Ellis and Paul Weiss jointly topped the value rankings by virtue of their roles on the acquisition of Howden Group by New York private equity firm KPS Capital Partners.

RSM and KBS Corporate took the top two positions in the financial adviser rankings, followed by BDO in third spot.

The value rankings were led by JP Morgan on £3.4bn, followed by Morgan Stanley on £2bn and Goldman Sachs on £1.7bn.



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