THE autumn credit crunch might have put the brakes on mergers and acquisitions (M&As) over the latter part of 2007.
But despite a 26 per cent slide in the amount of cash spent on deal-making in the second half, a frenzy of activity in the first six months meant that over the whole year, global M&A spending was up 21 per cent on last year at £2.38 trillion, accordi
ng to financial data firm Dealogic.
Who'd have guessed, at the outset of this year, that an Edinburgh-based company would have played the lead role in the most expensive takeover in banking history?
Royal Bank of Scotland (RBS), may have won the 2007 takeover plaudits, but it wasn't the only local company to feature in the M&A spotlight in 2007 – a year that turned out to be the most troubling for the financial markets in the past 20 years.
Garden centre firm Dobbies hogged the headlines for weeks in the summer as it became the prize in a gripping battle between Scotland's richest man, Sir Tom Hunter, and the UK's biggest supermarket group, Tesco.
On June 8, Tesco unveiled its surprise £155.6 million move on the Lasswade chain, as it sought to enter a key new market and boost its environmental credentials.
But dogged billionaire retail tycoon Sir Tom who, at the time, owned just 10.6 per cent of Dobbies, was setting the stage for a "will-he-won't-he" scenario. The City waited for Sir Tom to launch a counterbid. He didn't.
Instead, he steadily snapped up chunks of Dobbies until he had a 29 per cent stake. Any higher than 29.9 per cent and he would have had to have made a bid. But it was enough of a stake to stop Tesco de-listing Dobbies and gave Sir Tom a key influence on Dobbies' future decision-making.
Another Edinburgh institution that found new owners was Radio Forth, with former owner Emap flogging it for £1.14bn as part of a sale of its consumer magazine and radio assets to German media group Bauer.
In October, Cairn Energy, the Edinburgh-based oil and gas explorer, announced a surprise sale of its Bangladeshi operations in a deal worth up to £34m, as part of its focus on its core exploration activities.
Smaller Edinburgh firms also struck deals, with JRG Financial sold to the national Cavanagh Group for £5.3m. Sir David Murray sold his Apollo Metals arm to German giant ThyssemKrupp for an undisclosed fee.
However, it was RBS that grabbed the takeover limelight in 2007. Apart from raking in £4.2bn from the sale of Southern Water to a joint venture between JP Morgan and Australian infrastructure fund Challenger, the bank saw off intense competition from Barclays in a six-month battle for the flagship takeover of 2007: the £49.1bn consortium buyout of Dutch bank ABN Amro by RBS, Santander and Fortis.
The triumph by RBS chief executive Sir Fred Goodwin marked the world's biggest banking takeover, and easily the largest completed deal of the year.
Sir Fred was accused of overpaying for ABN. In a cute turn of phrase he replied: "Yes, the people who win do pay more than the people who don't win."
It turned out to be a wearying and frustrating end to 2007 for Scottish & Newcastle, as it became a takeover target for Carlsberg, which had teamed up with rival beer-maker Heineken to try to pick off the Edinburgh-based maker of Foster's, Newcastle Brown and Strongbow.
No-one really expected such a move to come from Copenhagen's Carlsberg, which was S&N's partner in Russian venture Baltic Beverages Holding (BBH).
Sir Brian Stewart, S&N's chairman, only found out about his partner's sleekit intent when he received a call minutes before Carlsberg and Heineken announced their plan. An initial £6.8bn proposal was dismissed by Sir Brian as "unsolicited and derisory", while a revised proposal of £7.3bn was also elbowed. S&N later took Carlsberg to arbitration over what it felt was a breech of the secretive BBH agreement.
As the curtain comes down on 2007, the acrimonious stand-off continues. The European beer titans have been given a January 21 deadline to launch a formal offer, and have also threatened to "go hostile", if necessary. S&N's chief executive John Dunsmore says he'll talk – but only if "a thumping great offer" comes in. Analysts expect S&N will start opening up if an offer of between 775-800 pence comes in.
But as it heads into 2008, S&N insists it still has a future as an independent company.
OTHER DEALS THAT MADE THE HEADLINES IN 2007• Aberdeen-based FirstGroup, the UK's largest rail and bus operator, bought Greyhound bus owner Laidlaw for £1.9bn.
• Whisky giant Whyte & Mackay was sold to Indian drinks magnate Vijay Mallya's United Spirits group for £595m.
• High street drugs giant Alliance Boots was bought for £11bn by private equity firm Kohlberg Kravis Roberts and its own deputy chairman, Stefano Pessina.
• Indian conglomerate Tata took control of Corus, the former British Steel company, with a £6.2 billion buyout.
• Barratt Developments became one of the UK's biggest housebuilders after rival firm Wilson Bowden agreed to a £2.2bn takeover.
• Benson & Hedges and Silk Cut owner Gallaher was bought by larger rival, Japan Tobacco, for £7.5bn.
• Financial news agency Reuters agreed an £8.7bn takeover by Canadian group Thomson.
• Dulux paint maker ICI was sold to Dutch rival Akzo Nobel for £8bn.
• The London Stock Exchange bought Milan-based counterpart Borsa Italiana for £1.1bn.
• Tycoon Sir Alan Sugar sold his Amstrad business to BSkyB for £125m.
