North West remains attractive to overseas investors ⋆ Business Lancashire

Investment into North West-based companies from overseas has increased dramatically in the first half of 2017 when compared with the same period last year, according to Deloitte.

The business advisory firm’s latest Cross Border Deals Radar, conducted in partnership with Experian Corpfin, reveals that the value of inbound deals has nearly trebled over the last 12 months – up to £1.1bn from £305m in 2016. Deal volumes were also high, with the total of 25 transactions up on the 21 seen last year, meaning the average deal value has rocketed threefold to £46m.

The value of inbound activity was boosted largely by the acquisition of Salford-based Exova Group Plc by Dutch provider of material and product testing analysis, Element Materials Technology BV, in a deal worth £620m. The transaction saw Exova delist from the London Stock Exchange and re-registered as a private limited company.

Transactions have come from across the globe in the first half of the year, with strong appetite from European businesses, with nine transactions, whilst five investments were made from Asian countries. Despite this, the most active country remained the USA, from which 10 deals were completed, accounting for 41 per cent of all inbound deals.

This reinforces recent research conducted by Deloitte, which revealed that dealmaking between the UK and the US has remained robust despite continuing uncertainties. The firm’s latest US/UK M&A Deal Monitor found that the value of M&A deals between the two countries has increased from $20bn in H1 2016 to $36bn this year, underlined by the 246 TMT deals since Q3 2015.

In contrast to the strong levels of inbound transactions, there has been a slowdown for investment from North West companies overseas. In total, 11 outbound deals were completed in the first half of this year, compared with 20 deals the previous year. Where disclosed, H1 2017 deals were valued at £24.5m, a decline on the £417m seen over the corresponding period last year.

John Breheny, director at Deloitte in the North West, said: “These findings highlight that North West assets are still considered among the most valuable around the world, with a strong split of acquirers across Europe, Asia and North America. In particular, the US/UK deal corridor has proven to be extremely lucrative in recent years, and it is unsurprising that technology, media and telecoms businesses are those most frequently targeted – a sector in which the North West excels.

“While UK companies have seemingly elected to access international growth through investment rather than overseas buy and build strategy, this is at least in part driven by the current weakness in sterling. As prices begin to reduce for overseas assets, we would expect to see these numbers return to previous levels.”

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