Our world-leading business sectors are proving an attractive proposition for investors
As the world slowly moves out of recession and confidence comes back to the market, M&A activity is back on the corporate agenda after one of the worst years in nearly a decade.
Indications from the market show that globally, corporates are seeing M&A as the right move to get a foothold into new markets especially in key boom sectors, enabling them to expand and diversify to strengthen their future growth and limit future risk from further downturns in the economy.
Last year, on a sector-by-sector basis, M&A activity was busier in growth sectors, such as energy, utilities, healthcare, and pharmaceuticals. According to a recent report by KPMG and Dealmakers Worldwide, this trend is also set to continue throughout 2010.
Companies considering M&A as part of their strategy would do well to look to countries like the UK, which is a strong destination due to established sectors offering companies access to strong existing and future marketplaces.
Last year, for example, M&A activity accounted for the majority of foreign investment into the UK, with over £19bn from Europe alone.
In the UK, the Yorkshire and Humber region attracts a high volume of M&A investment, with activity in the first three months of 2010 doubling. Mergers and acquisitions were collectively worth £531.97m, while the number of transactions was up 28.33 percent according to Experian.
The uplift in M&A activity is centred around key business sectors where, even through the recessionary period, marketplaces experienced growth and development.
The advanced engineering, healthcare and environmental technologies sectors have shown growth in the last 18 months and are attractive propositions for companies looking to deliver future business stability. Yorkshire and Humber is a world-leader in these sectors with established marketplaces, infrastructure, skills and access to research and development providing the platform for companies based in the region to innovate and lead in their fields. It is these companies that are attracting M&A interest and activity.
One such company is Davy Markham, a 180 year old Sheffield-based heavy engineering specialist which was recently acquired by leading 1bn turnover engineering procurement and construction company, Hindustan Dorr Oliver (HDO) a subsidiary of IVRCL Infrastructures and Projects. Davy Markham who are involved in the design, manufacture and assembly of large scale engineering used in the mining, quarrying, power generation, oil, gas and nuclear sectors operate in international markets with tunnelling and mine hoisting equipment, supplying more than 300 hoists worldwide and delivering one of the largest steel mill stands for China.
Davy Markham’s Managing Director Kevin Parkin recently commented: “It is great news for DavyMarkham's customers, employees and suppliers, since HDO along with its parent is financially very strong, is very growth orientated and dedicates itself to continuous improvement in all fields of its business. There are considerable synergies between ourselves and Hindustan Dorr-Oliver, as also IVRCL group and its commercial aspirations in markets like nuclear energy match ours perfectly."
Another leading edge Yorkshire engineering business, Precision Technologies Group (PTG) has sold PTG Heavy Industries to a company listed on the Hong Kong stock exchange as part of a £20m deal. The heavy engineering subsidiary has recently been acquired by Chinese machine tool maker Chongqing Machinery & Electric Company (CMEC), which specialises in commercial vehicle parts and components, power equipment, general machinery and machine tools.
As the world economy recovers and companies begin to look towards future growth the time is right to consider M&A investment in cutting-edge business sectors that can deliver access to booming global marketplaces. The Yorkshire and Humber region leads the way in sectors as diverse as AEM, environmental technologies and chemicals through to healthcare, food and drink, digital/new media and financial. Companies who invest in the region will find themselves in prime position to deliver a long-term corporate strategy, which will see them grow stronger and position them firmly among some of the world’s key industry players.
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