As reported by The Times, buyout activity of UK companies had hit $71.2bn by the middle of August.
This was nearly double the amount recorded by Refinitiv in the same period in 2019. The low valuation of UK companies has unleashed a wave of takeover activity led predominantly by US Private Equity funds.
Morrison’s was the subject of a bidding war between rival US PE funds before eventually agreeing on a 285p deal with CD&R.
Morrison’s was one of many attracting the attention of potential bidders flush with cash this summer. Ultra Electronics became a takeover target before the UK government intervened on national security grounds.
Defence company Meggitt is set to leave the FTSE 250 after agreeing a £6.3bn deal with Parker-Hannifin.
Data from broker Peel Hunt showed 38 UK companies had received takeover interest from private equity this year.
UK Private Equity
Despite a significant number of takeovers coming from overseas companies, there has been deals between UK based PE firms and UK companies.
London-based Bridgepoint has entered into a deal with Asian-inspired fasts food or grocery business Itsu. The deal is thought to value Itsu at £100m.
Bridgepoint were previously involved with the astronomical growth of Pret having helped grow the chain’s revenues 4x.
However, despite evidence of domestic UK PE funds backing or buying out UK companies, the lion’s shares of interest is coming from overseas.
The nature of this takeover activity highlights the value overseas investors see in UK companies and also the lack of UK domestic capital prepared for deployment in our most successful companies.
Kemeny Capital Resources
Explore Tax Efficient Investing with Kemeny Capital’s range of free downloadable guides covering EIS, SEIS and VCTs.
Interviews with the managers of Tax Efficient funds and the entrepreneurs leading UK early stage companies.