Foreign firms eyeing up the best of Britain
As bankers gear up for frenzied takeover spree . . .
BRITISH companies look likely to face a wave of takeover bids from foreign rivals this autumn, with experts warning that even giants like BT could be in the firing line.
City sources say bankers are set to mark their return from the beach by starting work on a string of deals to cash in on the weaker pound which has made UK firms cheaper for overseas buyers.
The flurry of attempted mergers and acquisitions will be seen as a vote of confidence in Britain following the decision to leave the european Union – and trigger a fees bonanza for advisors.
But it also sets the scene for more UK companies to fall into foreign hands, piling pressure on Theresa May to tighten takeover rules. The Prime Minister has pledged to create a ‘proper industrial strategy’ that would be ‘capable of stepping in to defend’ important sectors against opportunist bids.
Concerns about British companies passing into foreign ownership come amid the £24.3bn swoop on technology company arM Holdings by Japanese group softBank and the proposed £21bn tie-up between the london stock exchange and its German rival deutsche Boerse.
Iain Wright, chairman of the House of Commons business committee, said: ‘Foreign direct investment has helped this country and boosted our competitiveness. But to what extent do we say we have crown jewels and we are not going to get rid of them but protect them?’
sterling plunged to a 31-year low against the dollar following the Brexit vote and has also hit threeyear lows against the euro.
The fall in the pound has sparked speculation that undervalued UK companies could be up for grabs.
roger Buckley, a partner at BdO, said: ‘It’s still early days following the Brexit result, but a theme is emerging of overseas bidders seeing opportunity in the UK, with the fall in sterling outweighing the uncertainty.’
Market gossips reckon BT is one of the companies looking vulnerable to a bid after its shares fell from a peak of 497.5p in november last year to stand at 392.6p now.
sources said that some of the City’s top investment banks were running the numbers on BT for the likes of big global names such as america’s aT&T, China Telecom and deutsche Telekom.
Broker rBC Capital has a price target of 550p a share on BT. Traders reckon any bidder might have to pay a pound more than that – valuing it at around £65bn.
Mike van dulken, head of research at accendo Markets, said acquiring BT could make sense for a big buyer looking to benefit from the low pound and a steady income.
But he said it would be ‘a big old deal’ with any buyer having to take on BT’s £50bn-plus pension fund and its £7.6bn deficit. Buyers would also have to face down any government security concerns about the UK’s biggest fixed-line phone and broadband network supplier falling into overseas hands.
analysts at liberum Capital said the fall in ITV’s share price, from 278p in december last year to 195.9p now, could make it a target, including for liberty Global, which already owns 9.9pc of the broadcaster. liberum was also tipping graphics chip-maker Imagination Technologies as a possible bid target following softBank’s bid for rival arM.
andy Moseby, M&a specialist at technology and digital media law firm Kemp little, said the tech sector could see deals following the eU referendum. ‘a fall in the value of sterling makes UK assets more attractive to dollar-rich investors and buyers,’ he said.
There has also been speculation about potential M&a in the UK aerospace and defence industry, with GKn among those cited as possible targets, according to Barclays.