MERGERS AND ACQUISITIONS INVOLVING UK COMPANIES

1 Nov 2005 10:45 AM

Coverage United Kingdom
Theme Commerce, Energy and Industry

Expenditure on acquisitions in the UK by foreign companies increased from £8.8 billion in quarter two 2005 to £12.3 billion in quarter three. One significant transaction was the acquisition of lastminute.com Plc by Sabre Holdings Corporation for a press reported value of £0.6 billion.

Expenditure on acquisitions abroad by UK companies increased from £7.5 billion in quarter two 2005 to £7.8 billion in quarter three. One significant transaction was Barclays Bank Plc acquiring Absa Group Ltd for a press reported value of £2.6 billion.

Expenditure on acquisitions in the UK by UK companies decreased from £9.2 billion in quarter two 2005 to £7.2 billion in quarter three. The largest transaction was the acquisition of Resolution Life Group Ltd by Britannic Group Plc for a press reported value of approximately £0.8 billion.

TRANSACTIONS ABROAD BY UK COMPANIES

Number and value of transactions (Table 1)

All tables mentioned in this release are available at:
http://www.statistics.gov.uk/pdfdir/m&a1105.pdf

One significant transaction recorded during quarter three 2005 was the acquisition of Absa Group Ltd by Barclays Bank Plc for a press reported value of approximately £2.6 billion. This acquisition accounted for 33 per cent of the value of the 76 acquisitions, valued in total at £7.8 billion.

There were 24 disposals in the third quarter of 2005 valued in total at £1.2 billion.

Significant transactions abroad by UK companies include:-

Value in £ million
Barclays Bank Plc acquiring Absa Group Ltd 2600
Yell Group Plc acquiring TransWestern Holdings Lp 829
T&F Informa Plc acquiring IIR Holdings Ltd 768
Anglo American Plc disposing of Boart Longyear Group - 301 Gyrus Group Plc acquiring American Cystoscope Makers Inc 275 Wembley Plc disposing of their US gaming division -245 HBOS Plc acquiring MLP Lebensversicherung AG 216
Reed Elsevier Plc acquiring MediMedia MAP group of companies188 QinetiQ Group Plc acquiring Apogen Technologies Inc 163 GlaxoSmithKline Plc acquiring Corixa Corporation 159

TRANSACTIONS IN THE UK BY FOREIGN COMPANIES
Number and value of transactions (Table 1)

The most significant transactions recorded during quarter three 2005 were the acquisitions by Sabre Holdings Corporation and Kaupthing Bank hf and the disposal by Calpine Corporation for press reported values of between £0.5 billion and £0.6 billion each. The total value of acquisitions was £12.3 billion, representing 55 transactions. There were 16 disposals in the third quarter of 2005 valued in total at £1.4 billion.

Significant transactions in the UK by foreign companies include :-

Value in £ million
Sabre Holdings Corporation acquiring lastminute.com Plc 577 Kaupthing Bank hf acquiring Singer & Friedlander Group Plc 547 Calpine Corporation disposing of Saltend thermal power plant - 500 Challenger Connections Ltd acquiring Inexus (Group) Holdings Ltd 465 Castle Harlan Partners acquiring Polypipe Group 293
Centex Corporation disposing of Fairclough Homes - 264 Watson Wyatt & Company acquiring Watson Wyatt LLP 243
Lend Lease Corporation Ltd acquiring The Crosby Group Plc 236 A S Watson (P&C UK) Ltd acquiring Merchant Retail Group Plc 222 Deutsche Bank disposing of fund management businesses - 215

Number and value of transactions (Table 8)

The most significant transactions recorded during quarter three 2005 were the acquisitions by Britannic Group Plc, British Land Co Plc and Peel Ports Investments Ltd for press reported values of around £0.8 billion each.

There were 173 transactions in the third quarter of 2005. These consisted of 141 transactions involving independent companies with a total value of £5.6 billion and 32 transactions by company groups involving their subsidiaries with a total value of £1.6 billion.

Significant transactions in the UK by UK companies include :-

Value in £ million
Britannic Group Plc acquiring Resolution Life Group Ltd 835 British Land Co Plc acquiring Pillar Property Plc 800 Peel Ports Investments Ltd acquiring Mersey Docks & Harbour Co 779 Norfolk Acquisition Plc acquiring PHS Group Plc 585 Associated British Foods Plc acquiring Littlewoods Stores Holdings Ltd and St James Street Properties Ltd 409
International Power Plc acquiring Saltend thermal power plant 350 EMAP Plc acquiring Scottish Radio Holdings Plc 391 BUPA Finance Plc acquiring ANS 2003 Plc 328 Bridgepoint Capital Ltd acquiring Tunstall Holdings Ltd 225

REVISIONS TO EARLIER PERIODS

Data for quarters one and two of 2005 have been revised in the light of new information. Revisions to the aggregates used in this First Release principally occur for the following reasons :-

- Completion of deals
On announcement of a proposed deal an expected completion date is usually given. The publicly reported values will be allocated to the quarter of expected completion. If the deal is ultimately completed in an earlier or later quarter the recorded values will be re-allocated to the new quarter.

- Publicly reported values
Publicly reported values are initially used to compile the aggregates. These can vary considerably from the values ultimately supplied by the respondents, frequently due to the assumption of debt being included in the publicly reported value. A nominal value is applied if no publicly reported value is available. The final values used to create the aggregates are those supplied by the respondent.

- Non-completion of deals
On announcement of a proposed deal the publicly reported value of the deal is recorded. If the deal does not subsequently take place the recorded value will be deleted.

- Non-share deals
On announcement of a proposed deal it may appear that there will be transactions in the share capital of the companies involved and the publicly reported values will be recorded. If subsequent information contradicts this the recorded values will be amended or deleted.

- Control
On announcement of a proposed deal it may appear that the deal will give the purchasing company control of the purchased company i.e. a share ownership of greater than 50%. If subsequent information contradicts this the recorded values will be amended or deleted.

- Revisions from respondents
Very occasionally respondents revise the values that they have previously supplied to ONS. The revised values are those used to create the aggregates. ONS do not publish any analysis of revisions over time due to the data being individual occurrences at points in time rather than a time-series.

BACKGROUND NOTES

1. Types of transaction covered

- Cross border acquisitions
This denotes transactions where a company in one country acquires, either directly or indirectly, a controlling interest in a company in another country.

Direct transactions are those where a company in one country acquires a controlling interest in a company incorporated in another country.

Indirect transactions are those where a company uses an existing, or sets up a new, foreign subsidiary to acquire a controlling interest in a company incorporated in another country. The acquiring foreign intermediate company may be located in the same country in which the acquisition is being made or in a different country.

- Acquisitions within the UK by UK companies
This denotes mergers and acquisitions involving only UK registered companies. Where the acquired company was a subsidiary of another company the transaction is classified as a sale between company groups.

The phrase "Acquisitions in the UK by UK companies" refers to deals where ultimate ownership remains in the UK. Consequently, this heading does not cover the total number or value of deals where a UK company is the acquirer. Where a foreign company acquires a UK company and achieves that acquisition by means of one of its existing UK subsidiaries that deal is shown as part of the data under "Acquisitions in the UK by foreign companies".

2. Financing
This release provides details of the application of funds to effect mergers and acquisitions and the proceeds raised from disinvestment and demergers.

For indirect foreign transactions there is the added complication of considering the movements of funds either as a capital injection or in the form of loans between parent companies and their foreign subsidiaries making the acquisition. Occasionally the foreign subsidiary obtains the funds required partly or entirely outside the UK from sources such as:
- own resources
- borrowing from banks or other local sources
- share, bond and other capital or notes issued abroad.
A transaction may involve funding by more than one method.

3. Source of data
The information collected is based on reports in the financial press, specialist magazines, company and financial websites supplemented by special surveys to businesses to determine the form, value and timing of each acquisition.

If the information is not yet in the public domain then such transactions may not be reflected in the analysis. Where full information has not yet been received on the details of the acquisition the value of the transaction indicated in the public domain is used as an interim estimate.

4. Tables of significant transactions
These tables show the reported figures for a selection of significant transactions which occurred in the quarter - where "significance" is defined as the absolute value of the deal. The figures shown are usually the ones available from the financial press or other sources in the public domain although occasionally, with the consent of the company, the value returned to National Statistics is used in the tables instead of the press reported figure. If the company's consent cannot be obtained then the deal is excluded. Occasionally, therefore, a large deal may be missing from the lists and so it is best to regard these tables as an indication of the ranking of deals rather than a completely exhaustive listing. Press reported figures often differ to some extent from those supplied by companies to National Statistics and it is the latter which are used in compiling statistical aggregates in tables 1 to 9. Included in the prices quoted in the tables is the total published price paid for the company excluding any assumed debt where known. Deferred payments are included in the reported price even if the payment is made in a different quarter.

5. Notes to tables
For the cross border mergers and acquisitions surveys, please note that from 1996 the European Union includes Austria, Finland and Sweden. From 2004 the European Union includes Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Symbols used in the tables are:

.. Figure suppressed to avoid disclosure of information relating to individual enterprises.

- Nil or less than half the final digit shown.

The sum of constituent items in tables may not always agree exactly with the totals shown due to rounding.

6. Complete runs of series in this Release are available to download free of charge at http://www.statistics.gov.uk/timeseries. Alternatively, for low-cost tailored data call Online Services on 020 7533 5675 or email tailored@statistics.gov.uk

7. Details of the policy governing the release of new data are available from the Press Office.

8. National Statistics are produced to high professional standards set out in the National Statistics Code of Practice. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference. Crown copyright 2005.

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Next publication date
7 February 2006