Bargain Hunt: After Ted Baker, foreign buyers set to continue swoop on cheap London-listed firms
Lawyers expect further corporate raids on the capital’s listed businesses after Ted Baker became the latest to be picked off by foreign, private firms.
Bosses at the iconic British fashion firm said yesterday they had agreed an all-cash offer with the US-based bidder for around £211m.
The news came just hours after UK tech darling Darktrace was in early-stage takeover talks with US private equity giant Thoma Bravo, and was followed by Newcastle-based Go Ahead’s shareholders gave the OK to a takeover by an Aussie-Spanish consortium.
The Ted Baker deal marks he latest in a blizzard of foreign takeovers in the past 18 months as buyers take advantage of valuations that remain weighed down by the impact of Brexit, a weak pound and looming recession set to rock the economy this year.
While M&A volumes have slowed from a frenzied year of foreign takeovers last year totalling £76.7bn according to ONS figures, legal experts said the price tag of UK PLC had retained its appeal to overseas buyers.
“Favourable exchange rates mean that UK targets are comparatively cheaper for US buyers, exacerbated by depressed valuations for certain UK businesses in the face of recessionary pressures,” Clifford Chance M&A partner Katherine Moir told City PM yesterday.
Corporate partner at law firm Eversheds Sutherland Jon Gill similarly said he expects to “see more such transactions in the months to come” as US private equity giants remain flush with cash and prices of UK tech firms in particular remain subdued.
UK firms are trading at around 10 times 2023 earnings, far lower than in the US. Firms including Morrisons, Stock Spirits and John Laing have all been picked up by private equity over the past two years, amongst a host of others.
The raid on foreign firms has caused disquiet in some quarters however as political figures grow wary of the mass sell-off of British assets overseas.
If Darktrace were to be picked up by Thoma Bravo it would be seen as a blow to the UK’s tech community, with the firm often referred to as a shining light in the industry, and play into fears that London is lagging other bourses as a listing destination.
There is no certainty that an offer will be made but shares spiked around 20 per cent yesterday.