More UK firms are choosing to acquire abroad rather than focus on their home turf, according to the latest government figures.
The Office of National Statistics (ONS) found the value of acquisitions of UK firms by UK firms decreased by £2bn to £7.2bn during the third quarter 2005, while foreign acquisition values continued to increase.
According to the ONS, acquisition spend abroad by UK-based companies increased from £7.5bn in Q2 this year to £7.8bn in Q3. Acquisition spend by foreign firms into the UK increased by a total of £3.8bn to £12.3bn in the same period.
Between Q3 of 2003 and 2004 however, the number of acquisitions made abroad by UK companies decreased by 10 to a total of 76.
The number of acquisitions in the UK by UK companies also dropped, falling by 37 to a total of 173.
However, the number of acquisitions by foreign companies into the UK increased by 19 to 55.
The ONS’s report mirrors the findings of a separate report by market watcher Regent Associates, which found that 820 acquisition transactions were announced during Q3, up from 781 in Q1 2000 (CRN, 24 October).
Mark Hatton, managing director of distributor Sphinx, said current acquisition levels are a consequence of globalisation.
“It is a reflection of the fact that organisations are trying to increase both their scope and their market. The IT market is going through a period of significant consolidation owing to its level of maturity and limited capacity is forcing businesses to grow outwards into new markets,” he said.
Earlier this month online reseller WStore announced it was in talks with French reseller Inmac, previously part of Micro Warehouse, to acquire it from venture capitalist firm Gores Technology Group (CRN, 24 October).
Last week acquisition-hungry reseller Azzurri Communications also announced its takeover of London-based mobile consultancy DVH Group, its 14th acquisition in five years (CRN, 31 October).
Barry Jones, business development manager at Magnos Holdings, which recently acquired storage VAR Solid State Solutions, said: “In our sector there are lots of companies carrying higher cost structures, which can lead to a requirement for consolidation and ultimately acquisition.”
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