UK mergers set quarterly record

One of the big acquisitions was the purchase of Alliance Boots

Mergers and acquisitions involving UK companies hit record values before the credit crunch put a stop to them.Spending by foreign firms on acquisitions in the UK hit £49bn between April and June compared with £77.7bn in the whole of 2006.

Spending by UK firms overseas was £16.9bn compared with £5.9bn in the same period of last year, according to the Office for National Statistics.

There has been little merger activity since sources of capital dried up.

Transactions in the UK included the purchase of Alliance Boots by a consortium including the private equity firm Kohlberg Kravis Roberts for £11.1bn.

Big overseas deals in the period included AstraZeneca’s acquisition of Medimmune for £7.8bn.

But analysts expect the level of transactions to decline with the recent problems in the global credit markets set to make the financing of deals more difficult.

“You would have to say that the market will expect a slowdown in merger and acquisitions going forward and we may see some reflection of this in investment bank profits,” said Keith Bowman, equities analyst at Hargreaves Lansdown.

“Broadly speaking, the third and fourth quarter this year should be much quieter with more expensive borrowing costs and also uncertainty over credit conditions as it is more difficult to raise money.”