Scots mergers, acquisitions, deals top £16bn

The value of mergers, acquisitions and share deals involving Scottish registered corporates soared from £4.9 billion in 2020 to £16.4 billion in 2021, according to the latest Experian United Kingdom and Republic of Ireland M&A Review.

The volume of deals announced in 2021 rose 38% from 281 in 2020 to 388 in 2021.

“Whilst the M&A market has some way to go before reaching the levels enjoyed pre-pandemic, 2021 was certainly a year of reversed fortunes,” said the report.

“Activity was up across all value segments, most notably in the number of mega deals announced – whilst 2020 saw no such deals, 2021 recorded six, worth £10.6bn.”

Among the big Scottish deals in 2021 were the £3.3 billion sale of Aberdeen-based FirstGroup’s North American businesses First Student and First Transit to Stockholm-based investment firm EQT Infrastructure, and the £2.32 billion takeover of Glasgow-based mobile power giant Aggreko plc by private equity firms TDR Capital LLP and I Squared Capital.

Others included Edinburgh-based investment giant Abrdn’s acquisition of Manchester-based platform Interactive Investor for £1.49 billion, and Perth-based SSE’s deal to sell its 33.3% stake in Scotia Gas Networks Ltd (SGN) for £1.2 billion to a consortium comprising existing SGN shareholder Ontario Teachers’ Pension Plan Board and Brookfield Super-Core Infrastructure Partners.

The report added: “Small, mid-market and large cap deals all rose on average by around 33% in contrast to the numbers recorded in 2020.

“In terms of value, the mid-market enjoyed growth of just over 30% with small cap deals not far behind with a 24% increase.

“With the continued easing of restrictions, Scotland’s dealmakers have a lot to look forward to in 2022.

“Scotland accounted for 5.1% of all UK deal values and 5.6% of deal volumes.

“One of Scotland’s largest deals was announced in the final quarter of the year.

“In December, global investment company Abrdn, announced its acquisition of online platform interactive investor for £1.49bn, from shareholders including JC Flowers, in a move by Abdrn into direct investment.

“Other noteworthy deals included the £465m all-share acquisition of Perth-based Stagecoach Group by National Express, in a deal which brings together two of the largest transport operators in the UK; as well as a £500m share buy-back by FirstGroup, which has confirmed a return of capital to its shareholders.

“The group’s largest shareholder, activist investor Coast Capital, has committed to selling down its holding of more than 156m shares, which comprises about one-third of the tender offer …

“Professional services was Scotland’s most active sector in 2021, with the 108 recorded deals representing a 50% increase on 2020, whilst the value of the deals rose from £1.18bn to £5.07bn.

“Manufacturing came a close second in terms of volume, registering 103 deals, up from 75 in the previous year.

“Value-wise, there was no significant change.

“TMT was the third most active sector, on 81 deals, up 27% from the 64 deals of the previous year.

“Valuations in this sector rose astronomically, from £216m to £2.58bn.

“Strong growth was seen in most sectors in terms of deal volume, with nearly all industries enjoying double-digit growth.

“As has been seen across most areas, valuations also rose in many sectors, with notable exceptions being construction and health …

“Where detailed funding arrangements were disclosed, cash and existing funds were the preferred method of financing deals.

“Private equity backed deals represented 23% of the total volume, a level which has remained stable year on year.

“Scottish Enterprise was by some way the most prolific investor, with Par Equity, Old College Capital, Business Growth Fund, SIS Ventures and Maven Capital Partners also actively investing in the region.

“Debt funding supported just under 6% of deals announced, down slightly from 8% last year, with HSBC, Scottish National Bank and ThinCats being the most active …

“Addleshaw Goddard topped the legal rankings with 34 deals, followed by Pinsent Masons in second place with 15 deals, and Gateley in third on nine.

“Slaughter and May topped the value rankings, having advised on three of the top ten deals in Scotland in the year so far.

“Freshfields took second position, and Davis Polk rounded out the top three.

“Anderson Anderson & Brown topped the financial adviser rankings, with 34 deals, followed by RSM on 21.

“Azets took third place with 15 deals.

“Goldman Sachs secured first position by value, with Morgan Stanley in second place, and JP Morgan in third.”