Takeover fever grips the City: Private equity giants swoop
Takeover fever grips city as private equity giants pounce on even more London-listed companies
- In less than 18 hours, three more companies panicked
- Takeover activity raises concerns about British companies being snapped up cheaply
- There are growing concerns about London’s reputation
Takeover fever grips the city as private equity predators surround some of Britain’s biggest companies.
In the space of less than 18 hours between Thursday afternoon and yesterday morning, another three London-listed companies got caught up in the mergers and acquisitions, or mergers and acquisitions.
Shares of veterinary group Dechra Pharmaceuticals rose 33 per cent after it revealed it was in talks with private equity group EQT over a potential £4.6 billion deal.
Fellow FTSE 250 company Network International was approached by a consortium of CVC Partners and Francisco Partner Funds, while property company Industrials REIT backed a £500m acquisition by Blackstone.
The takeover activity – on top of a host of other bids and approaches so far this year involving companies such as Dignity, Hyve and John Wood Group – has raised concerns that British companies are being snapped up on the cheap.
Fever: In less than 18 hours, another three London-listed companies got caught up in the M&A, or M&A, frenzy
And with takeovers leading to companies being delisted, fears for London’s reputation are mounting at a time when the stock market is struggling to attract the biggest companies.
Interest in takeovers in British companies increased during Covid as bidders sought to take advantage of low price tags and the weak pound in a wave of ‘pandemic looting’. Among the companies sold in recent years are G4S, the AA, Morrisons and Ultra Electronics. And this pattern has lingered in the post-pandemic world, as a slew of “opportunistic” investors flock to London’s downward prices.
Fourteen UK companies have been approached with private equity acquisitions since early 2023, with more in the pipeline. Victoria Scholar, an analyst at Interactive Investor, said: ‘There is a feeling among international investors that the UK is ripe for M&A.’
She said the pound’s recovery this year has encouraged “opportunistic investors” to “hit targets before it’s too late.”
The wave of takeovers stems from concerns about the future of the London stock market. Holiday Inn owner Intercontinental Hotels Group warned this week that it was “not very appealing” to be. Cambridge-based chip designer Arm has opted to list its shares in New York and CRH, the largest building materials company in the world, is shifting its listing across the Atlantic.
Danni Hewson, an analyst at AJ Bell, called the current food frenzy a “huge concern for the government and the London Stock Exchange.”
However, some shareholders are fighting back.
London-listed event organizer Hyve backed a £481 million takeover by US-based Providence Equity Partners in February. But top 20 shareholders M&G, Redwheel and Blackmoor Investment Partners have spoken out against the deal. If investors who own enough shares vote against the takeover, it will collapse.
“At the moment, UK pensioners and shareholders risk being shortchanged if we allow bidders to buy companies at the UK’s current discount level compared to European, US and other global peers,” a Blackmoor spokesman said.