M&A Frenzy

According to analysts, a mergers and acquisitions frenzy is sweeping the UK. This follows a surge of M&A activity in the gambling sector that has seen a number of significant deals completed, including a £2.3bn deal between Ladbrookes and Gala Coral in July, and a £6bn merger of Betfair and Paddy Power in August. In total, between January and August this year, there have been more takeovers and mergers in the UK gambling sector than in any other country in the world.

All of this activity has occurred despite difficult retail conditions, larger competition (particularly online), rising gaming duties (up to 25%) and an increasingly strict regulatory environment. However, despite these challenges, the industry has grown significantly. According to the Gambling Commission, revenue in the UK gambling industry climbed from £5.6bn in 2010 to £7.1bn in 2014.

Predictors: Which Industry Would You Bet On?

The UK economy is growing following recession and the CBI’s Economic Forecast released in November anticipates GDP growth of 2.9% in 2015, more than double 2013’s rate (Barclays Bank, 2015). So, according to Barclays’s latest figures, which industries are helping to drive this growth through promising expansion next year?

  1. Convenience Food (+30% growth)

With a record number of people employed and lives getting busier year-on-year, the convenience food market is predicted to be the biggest grower, with spend increasing from £37bn to £49bn over the next year alone. Demonstrating the M&A activity within this industry, as a result of its success, one of Ireland’s largest chains of Mexican fast-casual restaurants with venues in Belfast, Galway and Dublin, was acquired by Boojum in August.

  1. Creative Industries (+10% growth)

According to the latest government figures published this year, the creative industry has averaged growth of 10% each year since 2012. Just this month, Bigdog agency acquired Jellyfish Creative in a move that brings the company’s turnover to £14m.

  1. Legal Services (+4.9% growth)

According to The Law Society, all growth indicators for the legal services sector point upwards thanks to a general increase in business activity. Essex law firm Birkett Long has made its sixth acquisition in as many years with the addition of Colchester-based Asher Prior Bates, bringing total staff count to 188.

  1. Home Building (+4.8% growth)

The Construction Product Association predicts overall growth within house building at 4.8% in 2015 with this output predicted to increase by over 22% in the next five years. Growth in property construction looks even more promising, with residential due to rise by 10% and commercial by 8% in 2016. Testament to this, Gresham House (one of the oldest investment companies quoted on the stock exchange) is pursuing a number of acquisition opportunities after netting £7.25 million from a property disposal.

  1. Hotels (+4.3% growth)

Ireland’s largest hotel group Dalata Hotels has stated it believes that there is currently a strong pipeline of Irish hotels to acquire, confirming plans to raise €160 million for further acquisitions.

According to PWC, growth in the industry has been driven by average daily rate increases averaging 4.3% in some regions and 3.6% in London, while occupancy levels are also due to rise, boosted by the hosting of the Rugby World Cup.

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