Overseas appetite soars for UK retail M&A


Foreign interest has created an increase in business activity in the UK retail sector in 2021, with foreign acquirers presenting 43% of transactions during the year, which would be the level of highest activity observed in a decade.

According to research by Grant Thornton UK, this is a “significant” increase on pre-Covid levels in 2019, when foreign acquirers accounted for 35% of transactions.

The research also revealed that in the fourth quarter of 2021, investors and commercial buyers acquired 19 UK-based retail businesses. This brought the total UK retail and consumer transaction volume in 2021 to 65, the highest level since 2017.

Overall, disclosed deal values ​​for the sector in 2021 have returned to pre-Covid levels, up £13.5bn from £7.9bn in 2020. Grant Thornton said that this reflects that transaction activity all but ceased at the start of the coronavirus but came back into effect in 2021.

Additionally, one of the biggest trends in 2021 has been the proliferation of private equity (PE) into the retail M&A mix, with private equity activity in the sector reportedly at the highest level since. more than a decade.

Notable deals include the takeover of Morrisons by US private equity group Clayton, Dubilier and Rice for £7bn and the acquisition of Selfridges for £4bn by Thai-Australian alliance, Central Group and Singa Holding.

Nicola Sartori, Head of Retail at Grant Thornton UK, said: “The UK is once again seen as an attractive proposition for international investors. The uncertainty surrounding Brexit, which for many years made buyers reluctant to invest in the UK, has largely disappeared and the country has regained its footing as a strategically important market.

“Deal activity towards the end of 2021 highlighted a recalibration of ‘the end of bricks and mortar’ predictions towards a more balanced approach, which saw investors value the combination of presence physical store with a solid omnichannel offer.”

She added: “Not only has Covid-19 changed the way we shop, but also the way we live. In the fourth quarter, shoppers continued to seek deals that capitalize on post-pandemic consumer trends such as health and fitness and increased demand for home delivery.


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