With Kraft Heinz’s recent approach to Unilever and last year’s takeover of Sky by Rupert Murdoch’s media company 21st Century Fox making the push for M&A evident, Goldman said he expects it will continue to be an “ongoing feature” for markets this year.
For Goldman, who manages the BlackRock UK Equity Income Fund, the opportunity is in finding the companies which are well-positioned to be involved in future deals.
“We expect it’s going to be an ongoing feature of this year,” Goldman said, adding that “debt is so cheap and the world although it’s not really repaired, it’s getting better.”
One such area where Goldman can see there are opportunities is the packaging industry and companies such as DS Smith where he has spotted opportunity for consolidation and adds it is a “very attractive” holding.
The grounds for a surge in M&A was also spotted by Oliver Huet, of Edmond de Rothschild, who in October said: “The M&A universe is very rich in the UK,” and added “Even with the Brexit outcome we can see that M&A is going to recover.”
Goldman’s comment follows a PwC survey on Monday which found 41% of CEOs in the asset management industry itself were also plotting a merger or acquisition in 2017.
Despite what Goldman sees as a positive atmosphere for M&A, he has his concerns about the UK economy but ultimately thinks the market is priced about right.
“When we think about the UK economy we are concerned, but there are still no shortages of strong financials – there are pockets of value to be found,” he said. “It’s not as if the market has been rerated, it’s just to do with the depreciation of sterling. Can you find companies that are attractive? Yes.”