UK offers rich returns... Let’s invest in our firms
TAKEOVER activity this year shows just how attractive UK businesses are, even if local investors fail to appreciate them.
More than 100 companies were on the receiving end of bid approaches in 2023, including 15 Midas recommendations. These range from the £4.5 billion deal for animal drugs giant Dechra Pharmaceuticals to a £142 million bid for Africa-based miner Shanta Gold.
Unveiled only last week at 13.5p a share, the deal represents a 27 per cent premium to the price at which Midas tipped the stock two months ago.
Shanta is not alone. Almost every offer this year delivered material rewards to Midas investors, including music royalty fund Round Hill, tipped in June at 63p and acquired for 90p three months later and logistics firm DX Group, recommended at 32p in July and taken out for 48.5p in November.
Most bids were materially higher than the prevailing share price too and, perhaps most tellingly, ten of the 15 bids came from private equity firms, many of them American.
Private equity has a reputation for ruthlessness. Industry big-hitters are routinely accused of prioritising short-term gains over long-term growth, doing anything in their power to make a quick buck.
If these apparent vultures are being welcomed as saviours by frustrated UK businesses, perhaps it is time for homegrown investors to sit up and take notice. Of course, it is reassuring to see share price gains for top companies from a host of different industries – from enterprising young firms to some of the best-known names in the UK.
But the stock market as a whole remains desperately undervalued.
This state of affairs is almost certain to improve and change could come as early as next year, especially if inflation continues to fall and interest rates follow suit.
The UK includes some of the most pioneering businesses in the world. Let’s show our appreciation and invest in them.