The lengthy process of Britain’s withdrawal from the European Union continues to create great uncertainty about the future of trade relations between the UK and the EU. This also has a significant effect on mergers and acquisitions (M&As) between British and German companies. Through August of this year, only 46 transactions took place. While the total number of transactions with UK companies remained stable at around 95 both in 2016 – the year of the Brexit vote – and in 2017, only 76 transactions were registered in 2018. These are the results of calculations made by ZEW Mannheim on the basis of the Zephyr database of Bureau van Dijk.

Though the total number of transactions with UK companies remained stable in 2017 and 2018, the transaction volume quickly collapsed after the vote. Between 2011 and 2016, the transaction volume of M&A activity between Germany and the UK rose from under two billion euros to just under four billion euros. 2014 was an exception with a volume of about 16 billion euros.

A look at the volume of German purchases in the UK and British acquisitions in Germany shows them to be roughly equal. The high transaction volume in 2019 is largely due to a single major deal: Vodafone’s takeover of Liberty Global’s European cable network for 18.4 billion euros, which included the cable operator Unitymedia.

The number of transactions shows a slightly different picture than the development of the transaction volume. Whereas the number of British purchases of German companies was slightly higher than German purchases before the Brexit vote, the situation reversed itself after the votes were tallied, with German companies buying more British firms than the other way around. “This may indicate that uncertainty is even greater in Britain than on the Continent,” says Dr. Niklas Dürr, a researcher in ZEW’s Research Department “Economics of Innovation and Industrial Dynamics” and project leader of the M&A Report.

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