The total number of mergers and acquisitions involving UK-based companies in March hit the highest level since before the pandemic, according to new data.
But the Office for National Statistics (ONS) said the number of deals is still below pre-pandemic levels as businesses look to inward investment rather than a series of takeovers.
In the first three months of the year, overseas companies spent £6.1 billion buying up British firms, compared with UK companies spending £2.5 billion on foreign businesses, it added.
UK companies buying domestic rivals were valued at £3.8 billion in the quarter – a significant fall on the £9.1 billion recorded in the final three months of 2020.
The ONS said: “Mergers and acquisitions (M&A) activity has been affected by the global coronavirus pandemic, where the total number of completed monthly domestic and cross-border deals fell from 196 in March 2020 to a low of 58 in May 2020.”
It added that since the fall, M&A activity started to recover, with 145 deals in December and 153 total monthly deals in March – the highest since March 2020, when there were 196 deals.
The statistics agency pointed out that the Bank of England’s business conditions report found that companies’ investment intentions picked up modestly but remained weak and “fewer contacts said that they were cancelling or postponing investment and more said they were reinstating investment to increase efficiency and capacity”.
A jump in foreign companies spending on UK firms during the first quarter was given a significant boost by Electronic Arts buying UK developer Codemasters in February for 1.2 billion dollars (£850 million).
Domestic mergers were boosted by publisher Future buying the owner of price comparison website Go Compare for £594 million, and charitable foundation the Wellcome Trust buying developer Urban & Civil for £506 million.