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09 January 2017

Fall in foreign takeovers of UK companies

Last year's sharp devaluation in the pound was not enough to attract a flurry of overseas buyers, according to new figures.

While high-profile deals gave the impression that acquisition activity remained reasonably active, research published by The Daily Telegraph shows the number of foreign acquisitions of British firms dropped 30% year-on-year in the second half of 2016.

Softbank founder Masayoshi Son acquired UK-based chip designer ARM Holdings for £24.3 billion last year, the largest foreign acquisition.

Meanwhile, the second largest deal for 2016 was struck by Rupert Murdoch, as 21st Century Fox bought Sky Plc for £11.6 billion - a deal made possible by the Brexit-related currency discount.

But sterling's sharp decline was not enough on its own to trigger a takeover frenzy, as some economists had predicted.

Corporate advisors blamed the decline in deal-making on a lack of confidence in Britain's corporate and political landscape.

The uncertainty has also affected domestic acquisitions, which have seen a drop of 16% over the same period, the newspaper is reporting.

The outlook for maintaining a robust merger and acquisition market in 2017 looks gloomy, as experts predict uncertainty over the UK's growth prospects is set to intensify as the government formalises the process to exit the EU.

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