North East deal values rise almost 20% in Q1 of 2015 - Paul Mankin's M&A analysis

The first quarter is traditionally the quietest but 2015 launched with a series of high profile North East deals, as PwC's Paul Mankin reveals

Paul Mankin of PwC
Paul Mankin of PwC

European M&A activity totalled US$233.5bn (£147.89m) in the first quarter 2015, which is comparable to the same period last year (Thomson Reuters) but the number of announced deals was down 6%.

Q1 is traditionally the quietest quarter and 2015 was no different with the UK M&A market slowing during the first three months, according to Experian.

In addition, both the number and value of deals recorded was down on the same period last year, although some of this may be due to companies deferring transactions until after the upcoming general election.

In the North East there was no change in deals activity compared with the first quarter of 2014, with 38 transactions completing.

However, disclosed deal value was up by almost 20% at £156m compared with £131m.

Dealogic reported that the UK was the most targeted European nation with cross-border buyers accounting for more than 80% of UK targeted value.

Darren and Brian Jobling, chief executive and executive chairman of Eutechnyx
Darren and Brian Jobling, chief executive and executive chairman of Eutechnyx

In the North East only two overseas companies invested in the region during the quarter.

In January ISG sold its UK gas boiler division to Groupe Atlantic, which is headquartered in France, and in February Eutechnyx sold a part of its business to DMi Inc, based in the US.

Healthcare was the top targeted sector globally during the period, driven by pharmaceuticals M&A.

This sector has also continued to be active in the North East following on from the significant activity in 2014, which included the sale of Aesica in November and the flotation of Quantum Pharma the following month.

Pharmaceutical wholesaler Norchem was acquired in January by Lexon (UK) and in March NVM created a new business by combining Cleveland Biotech, an existing NVM portfolio business, with Cardiff-based Biological Preparations in a deal totalling over £10m.

Other significant private equity activity in the region during the period included the acquisition of CAV Aerospace by Better Capital, who committed £40m to fund the acquisition and the sale of 50% of Durham-based Learning Curve to MML Capital Partners.

Private equity-backed Impetus Waste Management acquired a further waste transfer station and processing facility with the acquisition of T Shea in February.

Jiang Yi of Zhuzhou Institute, Tim Smallbone of inflexion private equity, William Wang of CSR Times Electric Co. Ltd, Andrew Caffyn and Andrew Hodgson of SMD
Jiang Yi of Zhuzhou Institute, Tim Smallbone of inflexion private equity, William Wang of CSR Times Electric Co. Ltd, Andrew Caffyn and Andrew Hodgson of SMD

In the same month Chemoxy received £10m in growth capital from the Business Growth Fund.

In February Inflexion Private Equity and management announced the sale of Wallsend-based SMD to CSR Times Electric.

The £120m deal was subject to filings with the Chinese authorities and completed after the quarter end.

The IPO of ScS Group on the London Stock Exchange provided an exit for US private equity firm Sun European Partners LLP, which bought ScS out of administration in 2008.

The flotation, following on from the IPOs of Quantum Pharma and Virgin Money in the last quarter of 2014, raised £35.7m.

Market confidence continues to grow and although deal flow may have slowed prior to the general election, the underlying positive momentum in the regional M&A market looks set to continue through the first half of the year.

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