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Sterling Plunge Leaves FTSE 100 Giants Exposed To US Predators

Alphonse85D18590 2022.10.09 22:02 조회 수 : 1

The plunging value of the pound has put a slew of UK companies at risk of being sold off to American predators. 

Blue chip firms including gambling group Entain, packaging company DS Smith and telecoms behemoths BT and Vodafone are all now vulnerable to foreign corporate raiders, according to experts at broker Canaccord Genuity. 

Big-name brands in the FTSE250 including betting business Playtech, cybersecurity outfit Darktrace, Greggs, MoneySuperMarket and data analytics firm Ascential are also in the line of fire. 

Vulnerable: These leading British telecoms brands could be targets 

Market turmoil has sent the value of many London Stock Exchange-quoted firms plunging.

And the drop in the value of the pound following the mini-Budget has made UK firms look like bargain buys for overseas opportunists. 

However, enthusiasm for cutprice assets may be dampened by the rise in interest rates, which will make it more expensive for private equity firms to finance deals. 

Until recently, there was a spate of private equity bids for big names including supermarket groups Asda and Morrisons and defence firm Ultra Electronics. 

Listed overseas companies including Schneider Electric of France - which has made an offer for software firm Aveva - have also been on the hunt in the UK. 

Graham Simpson from Canaccord said that as the UK stares down 'the barrel of a recession', bidders will be looking for firms with strong cash flows, high profit margins and low debt that could 'weather the inflation and interest rates storm'.

He added: 'Private equity may struggle to raise finance. This is why we believe we will also see a potential wave of corporate mergers and acquisitions. UK valuations were very attractive even before the dramatic fall in sterling.' 

Entain, which owns Ladbrokes, was cited as a target by several analysts and brokers.

Its shares have fallen by a third this year. 

One City source said: 'Entain is definitely a target and MGM - with which Entain runs a joint venture - still has its eye on the company. It's definitely more vulnerable now that it's cheaper.' 

Another said: 'Entain is likely to be a target because it's gaming which is relatively recession-proof.' 

The source added that Darktrace - for which US private equity firm Thoma Bravo recently backed away from a bid - was still a likely candidate.

Vodafone could be attractive to a US buyer, the source added. 'Darktrace has been battered since it went public, so it would make sense, and Vodafone could happen at some point. Though Vodafone is very big and very political - it would be a US buyer coming in, if anybody did.' 

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Analysts said takeovers of telecoms firms such as BT and Slot Online Vodafone, though tempting, would be complex. 

'We see companies operating in food and health and beauty as takeover targets,' said another source.

'You are likely to see big players such as Coca-Cola, Pepsi and McDonald's looking to pick up UK targets on the cheap.'

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