Cheap deals drive bidding for UK firms to 14-year high

The combined value of takeover attempts involving UK targets reached almost $217bn in 2021, compared to $58bn during the same period in 2020

Bids for British businesses are at their highest level since 2007 as private equity firms and overseas buyers seek cheap company deals.

The volume by combined value of takeover attempts involving UK targets has reached almost $217bn (£156bn) in 2021. This is up from $58bn in the same period a year ago, according to financial information provider, Refinitiv.

Companies including St Modwen, Vectura, Wm Morrison and Signature Aviation have attracted bids since the beginning of the year. Meggitt, the FTSE 250 aerospace company, this week agreed to a £6.3bn takeover by Parker Hannifin, an American engineer.

Foreign investors and private equity groups have been spurred on by bargain valuations in the London stock market which trades at a relative discount to equity markets in Europe and the United States.

Share indices in the US, France and Germany have recovered from Covid-related falls and are back up to pre-pandemic levels. However, the British FTSE 100 is yet to recoup all of the losses. Long-term investors still have concerns about the fallout of Brexit which has weighed on the equities market since the Leave vote in 2016. That said, the success of the vaccine rollout has encouraged investors to take advantage of cheap valuations. Low borrowing costs due to low interest rates have also brought on the takeover boom.

Many of the bids have come from private equity firms who use debt to help finance buyouts and have amassed record sums of unused capital in their funds that they need to put to work. Buyout firms usually own a company for three to five years before selling them.

The number of bids for UK companies is also at multi-year highs, according to Refinitiv, including takeovers of private companies and bids for British groups by UK firms. There have been 2,463 deals this year – this is the highest since at least 1998 – the data shows. They included 220 takeover proposals last month, with a total value of around $35bn and 349 in June with a combined value of $37bn.

Read more

Deals of the Week July 26-30 – a GrowthBusiness roundup

Avatar photo

Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

Related Topics