Leisure sector drives UK M&A activity

The hotel and leisure sector was a steady driver of overall UK M&A activity in the first half of 2007, a new study by PKF Accountants & business advisers has shown. Over the last three years, the UK leisure sector has increased from 20 deals a quarter to 40 and on average the sector contributes £4bn in deal flow every three months.

The PKF study, Deal Drivers UK, produced in association with mergermarket, also found that the UK share of hotel and leisure deals in Western Europe, was the largest in terms of both deal volume and value - 42% and 80% respectively in the first half of 2007.

At the top end of the market, the deal landscape in 2007 was dominated by two cross-border buys of UK travel companies, both by German bidders. The first was a £1.5bn buy of MyTravel Group by Arcandor Group in February and in March TUI AG bought First Choice Holidays for £1.8bn.

The majo rity of the deal volume came from the small and mid market value band. In 2006, over 75% of M&A transactions occurred in the mid market and this continued in 2007, including significant deals involving Premier League football assets. A good example is the acquisition of Liverpool Football Club, to which PKF is financial adviser and accountant, by KOP Football Limited.

Private equity remains important in the UK Leisure and Hotel sector across both the large and mid cap areas. In the hotel sector, the largest private equity buyout in the first half of 2007 was the £440m MBO of Park Resort Limited, backed by US private equity firm GI Partner.


Robert Barnard, partner for Hotel Consultancy Services at PKF, said, “The data in this report shows M&A activity within the Hotel and Leisure industries to be a very healthy part of the overall UK figures.

“Hotel sector activity looks to be continuing strongly, indeed July saw Blackstone Gr oup’s acquisition of Hilton Hotels Corporation for $26bn (£12.8bn). And in the mid market, Peel Hotels sold its Avon Gorge Hotel in Bristol to an unnamed bidder for £15.5m in August. So the summer’s turmoil in the financial markets has so far not had a major effect on the sector.”

PKF commissioned mergermarket to explore the health of UK M&A across five key industry sectors - hotels & leisure, business services, food, real estate and manufacturing. mergermarket was also given access to PKF’s leading Corporate Finance partners across the UK’s six main regions - South East, South West & Wales, Midlands, East Anglia, North and Scotland. The first edition of Deal Drivers UK looks at deal volumes and values in the UK in the first six months of 2007.