British M&A Will Fall for a Further 15 Months, Report Predicts

By Ambereen Choudhury

July 21 (Bloomberg) -- Mergers and acquisitions among U.K. companies will go on declining for the next 12 to 15 months as the credit crunch slows Britain's economy, advisory firm Grant Thornton LLP said.

``If present economic conditions continue, it could take some years to climb back to the M&A peaks we saw midway through last year,'' said London-based David Brooks, head of M&A at Grant Thornton, in an e-mailed statement today. Deal values and volumes will fall for another five quarters, the report predicted.

The British pound has dropped 12.5 percent in the past 12 months on a trade-weighted basis, as the run on Northern Rock Plc and a housing-market slump eroded confidence in Europe's second- largest economy. British M&A has almost halved to $372 billion this year after a record 2007, according to data compiled by Bloomberg.

Emerging market countries and foreign acquirers may continue to cushion the fall, as they snap up assets in the U.K., Brooks said. ``The developing world is cash-rich and looking to spend, and the U.K. is putting a `For sale' sign up in the window.''

Banco Santander SA, Spain's biggest bank, agreed to acquire Alliance & Leicester Plc for 1.26 billion pounds ($2.6 billion) on July 14, less than half the U.K. mortgage lender's market value at the end of last year.

To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net