As we have discussed previously, it is received wisdom that a weaker currency will lead to an increase in inbound M&A activity as companies become relatively cheaper to acquire.
Received wisdom, but also incorrect wisdom as the latest figures from the ONS illustrate. It is a very one-dimensional statement.
After all, companies may be cheaper to purchase with a weak currency, but when earnings are translated back to the acquiror's currency: these will be correspondingly lower as well.
There should always be clear, strategic reasoning behind M&A activity, quite apart from pure fiscal drivers.
Data released by the Office for National Statistics (ONS) on Tuesday showed that UK companies took part in 155 successful deals worth a total of £30 billion in the second quarter, compared to £16.5 billion worth of deals in the first three months of the year. The number of British takeovers by foreign firms was much higher at 44 deals, though the value of those acquisitions was a mere £2.9 billion.