Brexit blamed for slump in retail sector mergers

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Nov 15, 2017
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There are more deals in the pipeline, including Tesco’s proposed £3.7 billion purchase of Booker

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Only 16 merger and acquisition deals have been done in Britain’s retail sector over the past year, figures published yesterday showed.

The number of retail business deals sank from 36 deals the year before, lawyers at RPC, the City of London law firm, said. But a significant number of deals are understood to be in the pipeline, with analysts suggesting that the next year could see an improvement in M&A fortunes.

For the time being, however, all the indicators are pointing south. Deal value also shrank significantly during the period from £3.5 billion in 2015-16 to £746 million in 2016-17. The law firm said that the prospect of the UK quitting the EU was the chief factor leading to investors, especially in private equity, “shying away” from deals.

Lawyers will be eagerly awaiting several deals on the stocks, including Tesco’s proposed £3.7 billion purchase of the retail and wholesale group Booker, which was referred to the Competition and Markets Authority in July. That deal is expected to get the green light.

The Co-op is making a bid for the convenience store chain Nisa, rumoured to be worth up to £140 million. The move comes after Sainsbury’s pulled out of its own approach.

Rumours have also circulating of a £4.4 billion deal in the offing for the discount retailer B&M by Asda. B&M itself is acquiring the grocery chain Heron Foods for £152 million.

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