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Foreign Appetite for UK Firms at 2021-High on Cheap Valuations

Joe Easton and Alexandra Muller
·1 min read

(Bloomberg) -- The value of foreign bids for UK companies is headed for the highest six-month tally since 2021 as cheap valuations fuel appetite for London-listed firms.

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There’s been £32.7 billion ($41.4 billion) worth of proposed, pending or completed takeovers of listed UK companies by overseas parties so far this year, an increase of 143% from 2023, according to data compiled by Bloomberg.

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The latest target is soft-drink maker Britvic Plc, which said on Friday that it had rejected bids from Danish beer-maker Carlsberg AS that valued the group at as much as £3.1 billion. Other firms which received foreign offers include investment services group Hargreaves Lansdown Plc and cybersecurity software company Darktrace Plc.

London-listed stocks are attracting attention as they continue to trade at a discount to international peers, with the UK market weighed down by a harsh cost-of-living crisis and the overhang of Brexit.

“UK listed companies are going to continue to be acquired by foreign acquirers, whether it is strategic or financial buyers, until either the valuation gap closes or shareholders become more willing to take a long term view and vote against opportunistic takeover offers,” said John O’Mara, an analyst at London-based broker Bluesky Capital Markets.

Based on price-earnings ratios, the UK’s FTSE 100 index is 12% cheaper than the Euro Stoxx 50 benchmark and 45% cheaper than the US S&P 500, with the latter’s valuation boosted by soaring large-cap technology stocks.

Read: London Stock Revival Gets Fresh Boost From Inflows Ahead of Vote

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