'Study Shows Exit Deals Don't Hurt the Welsh Economy.'

Western Mail (Cardiff, Wales), June 21, 2017 | Go to article overview

'Study Shows Exit Deals Don't Hurt the Welsh Economy.'


Byline: Sion Barry Business editor sion.barry@walesonline.co.uk

The vast majority of firms in Wales which have been acquired over the past decade, in exit deals with a combined value of PS2.5bn, continue to trade here, shows new in-depth research from corporate advisory firm Gambit.

And the majority of exit deals involving around 700 Welsh businesses between 2007-16 were to other UK businesses (via trade sales) or to their respective management teams through management buyouts.

For the purposes of the analysis, nine exit deals with values of more than PS100m each, collectively accounting for a further PS2.5bn, were not included by Gambit - nor were property deals and those involving subsidiary businesses in Wales of overseas companies.

These deals over PS100m included the de-listing of Cardiff-based Gyrus for a reported PS1.17bn to Japanese conglomerate Olympus.

Included are exits whether in the form of trades sales, buy-in and buy-outs, divestments and flotations - as well as Welsh firms delisting from the London Stock Exchange.

These types deals generated a combine value of PS2.5bn.

Geographically, south Wales dominated exit deal flow, accounting for more than 80% of the transactions analysed by Gambit, which is based in Cardiff Bay.

The average consideration below the PS100m threshold was PS8.7m, down from the PS10.1m in Gambit's last exit deal survey for the 2001-6 period.

Welsh exit deals experienced their low point in 2011, with a combined value of just PS50m. The peak, including deals involving those for more than PS100m, was just prior to the financial crisis in 2007, with a combined value total of more than PS2bn.

Over the period the most popular form of exit was through trade sales, which made up 72.8% of all transactions, followed by management buy-outs with 21.6%.

The largest management buyout deal on value was PS87m for Bluestone Resort in Pembrokeshire in 2013, followed by Tregedar-based Penn Pharmaceuticals Services in 2007 for PS67m.

Flotations on the London Stock Exchange, providing an exit or partial exit for shareholders, remain what Gambit describe as "rarities" in Wales, with only 11 during the decade. The largest was last year's PS131.1m float of Bangor-based property development firm Watkin Jones.

Nearly 75% of exit deals were to other UK businesses or their own management teams.

And of the 700 deals analysed by Gambit, 570 remain active today, which the corporate advisory firms says "dismisses the myth that ownership change creates a negative impact on the Welsh economy". …

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