Finance

Deloitte: ‘Brexit’ Could Open Door for Deals

7/25/2016 8:00 AM Eastern

Despite short-term uncertainties in the British deal market spurred by the United Kingdom’s decision to exit the European Union, research firm Deloitte believes transactions will pick up in the longer term, especially in the technology, media and entertainment sector.

 

The so-called Brexit threw U.K. financial markets into turmoil and sent currency values downward. But, in a report, Deloitte saw deal opportunity.

 

Deloitte said first-half deals in the TMT sector are up, largely due to several newspaper deals. But other segments in the sector are also expected to see growth.

 

About 260 U.K.-U.S. inbound and outbound deals were made in the first half of the year, according to Deloitte, up from 240 deals last year. In the TMT sector, about 125 deals were made in the first half of this year, up from about 90 in the first half of 2015.

 

Not included in this year’s tally is Japanese wireless firm SoftBank’s proposed $32 billion offer for U.K. semiconductor maker ARM Holdings, announced earlier this month.

 

“There is a consistency of deal-making in media, where companies are being driven by structural decline and the need to pursue survival strategies,” Paul Staples, Deloitte U.K. partner, advisory corporate finance, said in a statement. “But the U.S. market is still the world’s biggest advertising market and still has the highest-quality assets, so if you are a U.K. media group and you are underweight in the U.S., you want to buy.”

 

The impact of the U.K.’s Brexit vote on TMT deals is likely to be critical for the health of overall U.S.-U.K. M&A. Jason Richards, Deloitte U.K. transaction service partner, said that impact is likely to be mixed in the short term, with some buyers proving sensitive to Brexit uncertainty while others stick to their strategic guns.

 

“Some deals are taking a breather,” Richards said in a statement.

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