By Daniel Hunter

Experian, the global information services company, has revealed that the total volume of UK mergers, acquisitions, flotations, rights issues and placements funded by bank loans was up by 3.4% in the first nine months of 2012 compared with the same period of 2011 and also compared favourably to 2010.

The number of bank debt funded deals increased in the UK overall, with the strongest performance coming from Greater London, North West of England and Yorkshire.

More than a quarter of deals funded through bank loans came from the Professional and Business Activities sector. This was followed by Materials and Equipment Wholesale (16%), Finance Auxiliary Services (8.5%) and Computer Activities (8%).

The overall number of M&A transactions across the UK announced so far this year, however, fell— from 3,527 transactions in the first nine months of 2011 to 3,188 in the same time period in 2012. The total value of UK deals was also down around 8 per cent to £172.9 billion.

The only areas in the UK to see the number of transactions rise year-on-year were the South West (where deal volumes rose by 9.9 per cent), Northern Ireland (up 52.4 per cent) and Scotland (up 7.5 per cent).

Despite the decline in total volume, the number of deals with a disclosed consideration of over £1billion was up by 11.5% to 29 transactions between January and September 2012. All but one of these deals had a cross-border element. The biggest example of this trend in the last quarter was Tokyo-based Dentsu’s £3.1billion recommended offer for London advertising group Aegis.

The UK mid-market (transactions worth between £10 million and £100 million) and small segments (transactions worth between £0.5milion and £10 million) saw declines in both volume and value in YTD 2012 compared to the same period in 2011. The mid-market was down by around 20 per cent in volume and value, with small deals down by around 10 per cent for both.

The European picture

The UK M&A market has outperformed its European counterparts so far in 2012. Around 47.2 per cent of all European transactions included a UK element — either acquiring, merging with or being bought by a UK based company - up from 43 per cent in YTD 2011. In terms of value, deals involving UK companies contributed almost 45 per cent of the European total for the first nine months of 2012.

“Although transaction volumes in the UK have declined over the first three quarters of the year, the deal landscape has proved remarkably resilient when compared with certain other European markets," Wendy Driver, Business Development Manager at Experian UK&I, said.

“Particularly encouraging is the increase in the number of debt-funded deals taking place. With the majority of these falling into the small to mid market value range, it is a positive sign towards a potential upturn in deal flow as we move into the last quarter of the year.”

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