Plummeting sterling lures Chinese buyers to UK

A study shows Chinese acquisitions of UK companies has increased by more than 200% since 2014.

Taking advantage of favourable currency rates following the Brexit vote, the number of Chinese acquisitions of UK companies increased by 215 percent from 2014 to 83 transactions in 2016, according to a new global M&A report by mid-market M&A and debt advisory firm Livingstone.
 
According to the report, The Acquirers – A Global Review , Chinese buyers account for one in 20 international acquisitions in the UK marketplace.
 
There were 756 inbound deals into the UK in total in 2016. Of those, 275 were backed by investors from the Americas, 208 from Europe, 83 from China and Asia, and 22 from the Middle East and Africa.
 
The report found that following the UK's referendum on EU membership in June 2016 inbound M&A surged by nearly 15 percent with a significant spike in Q4, jumping from 514 deals in 2015 to 588 in 2016.
 
US investors remain the largest source of international investment into UK businesses, with inbound acquisitions increasing 5 percent from 2014 to 2016. Deals backed by European investors increased by 18 percent, accounting or more than 35 percent of all recorded inbound deals.
 
Media and technology was a particularly attractive sector for investment, with transactions up 25 percent year-on-year, from 110 in 2014, to 107 in 2015, and 134 in 2016.
“While 2016 was a year of significant political change, particularly given the US election result and the Brexit vote, it was a strong year for M&A,” Jeremy Furniss, a London-based partner at Livingstone, said in a statement.
 
“The rapid increase in acquisitions by Chinese investors has attracted attention across the world, and is set to continue.”
 
Less than a month after the Brexit vote, US cinema chain AMC Theatres, which is backed by Chinese conglomerate Dalian Wanda, agreed to acquire Odeon and UCI Cinemas Group from Terra Firma Capital Partners in a deal valuing the businesses at around £921 million (€1.1 billion; $1.22 billion).
 
“While we acknowledge that there are some uncertainties related to Brexit, we are encouraged that current currency rates are highly favourable to AMC with the pound falling to a three decade low versus the dollar,” AMC chief executive officer and president Adam Aron said in a statement at the time.
 
In April 2016 UK-headquartered 3i Group sold Mayborn Group, the owner of baby products business Tommee Tippee, to Shanghai Jahwa, China's largest domestically-owned manufacture of personal care products and cosmetics, in a deal understood to value the business at around £300 million, delivering a 3.6x return to 3i and its investors. ?