PANDEMIC PLUNDERING
Takeover frenzy grips City as predators go bargain hunting
THE City was gripped by a fresh frenzy of takeover activity yesterday as cash- rich suitors hunted for bargains on Britain’s bombed out stock market.
Chemicals gi ant Elementis spurned a £755m approach, while estate agent Countrywide received another £103m bid and ‘internet-ofthings’ firm Telit Communications rejected a £259m advance from private equity.
At the same time, technology firm IMI Mobile announced a £543m tie-up with US giant Cisco ( see panel) and bosses at retirement builder McCarthy & Stone backed a sale of its business.
The offers came amid an already-dizzying amount of takeover activity – with bookmaker William Hill, insurer RSA and security firm G4S all targeted.
Experts said the weak pound and Covid-hit stock prices have made UK firms appear cheap to overseas buyers – sparking a string of bids that could lead to a fees bonanza for bankers and other advisers.
A City source close to one of the deals said: ‘This is pandemic plundering.’
Elementis, which started as a tea merchant in 1844 but is now one of the UK’s biggest chemicals businesses, said it had rejected a third approach worth £755m from US rival Mineral Technologies because it fell ‘significantly short’ of what the company was truly worth.
Its board unanimously rejected the offer, branding it ‘highly opportunistic’. Shares fell 2.4pc, or 3.1p, to 123.7p.
Telit too rejected a £259m takeover bid from private equity firm Dbay Advisors, saying it would ‘fundamentally undervalue’ the business. Its shares stayed flat.
And Countrywide said it was considering an improved offer from rival Connells of £112m, sending its stock surging 22.4pc, or 57p, to 312p.
Retirement builder McCarthy & Stone backed an increased offer from private equity firm Lone Star worth £647m. Shares shot up 3.5pc to hover just below its suitor’s bid price of 120p.
Russ Mould, investment director at AJ Bell, said the average shares premium added by pursuers was 47pc for deals announced since October – underlining how overseas buyers view British shares as cheap.
‘If buyers feel they can still justify their purchase at that sort of premium, then they clearly think they are getting some kind of value, both financially and strategically,’ Mould said.
Stocks are being weighed down by Brexit uncertainty, he added, while sterling’s weakness against the euro means foreign firms can get more bang for their buck. And some bidders may also be choosing to pounce now in order to secure a lower price. ‘They may think now is a good time to act, as vaccines are rolled out and better times – and higher share prices – may lie ahead,’ Mould added.
In the past month, multi-billion pound takeovers of William Hill and RSA have been sealed, with talks continuing over swoops on broadband firm Talk Talk and video games maker Codemasters.
Goco, the owner of price comparison website Gocompare, has also backed a takeover by publisher Future and the AA has agreed to sell itself to private equity.
British chip maker Arm is in the process of being sold to US rival Nvidia for £30bn and Mike Ashley’s Frasers Group was yesterday racing to put together a last-minute rescue of collapsed department store chain Debenhams.
The flurry of takeover deals is likely to result in a fees bonanza for bankers, lawyers and public relations firms, who could potentially scoop tens of millions of pounds from the most lucrative deals.