You’ve probably heard that the plunging pound following last year’s Brexit vote means foreign tourists are doing more of their shopping over here because it’s much cheaper than what it used to be.
Well, the same also applies to foreign businesses that are in the market for a new acquisition, with the weak sterling making UK firms look attractive to foreign predators.
According to the ’s own data, the pound is down by 15% against a basket of currencies since last June’s referendum, so it’s easy to see why foreign eyes are being cast over some of the UK’s most prized assets.
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Group PLC (), Sky PLC () and (), along with a host of others, have all been the subjects of bids from abroad.
The latest one being taken out of the shop window and put into the basket is IT firm PLC () which is set to complete a £3bn merger with French outfit Schneider Electric at the third time of asking.
So which company might be next on the international radar? ’s investment director Russ Mould takes a look …
Will improve last year’s offer for Burberry?
First up is luxury fashion house Burberry PLC () which reportedly fended off an unwanted approach from US handbag maker Inc () late last year.
’s investment director Russ Mould isn’t ruling out , or another firm, returning with an improved offer, although he does think the shares aren’t as cheap as they used to be.
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“A bid offer would be no surprise in some ways, given Burberry’s iconic brand, fat profit margins and the wave of consolidation which continues to sweep the luxury goods industry,” explains Mould.
“However, the shares have advanced strongly this year and shareholders are probably going to be willing to give new chief executive Marco Gobbetti some time to stamp his authority on the company.”
ITV to go the same way as Sky?
In the broadcasting sector, Mould reckons there’s a chance () could go the same way as Sky PLC (), given its attractive proposition and the fact the share price has tumbled in recent months.
“ITV has an unrivalled position in the UK free-to-air broadcast arena with its ability to attract mass market audience and blossoming content catalogue,” says Mould.
“The 9.9% stake held by , the US-based owner of , means talk of a bid will never be far away and fears over a post-Brexit advertising slowdown continue to weight on the shares which have fallen by 30% in sterling terms since May.”
Long-term growth records make Spectris and ‘attractive’
On the second tier, two precision engineers () and PLC () might also be targeted, with Mould making the case that both would be smart investments due to their strong long-term growth records.
“In [’s] case chief executive and chairman David McMurtry and deputy chairman David Deer are in their late seventies and they own nearly half of the stock, although it would be unwise to expect them to sell to anyone who comes knocking.
“The company’s history shows a strong culture and management has always worked hard to keep jobs rather than cut them during cyclical downturns, so staff welfare will be a high priority.”
Capital Drilling could be targeted after share price slide
() has seen its value take a hit this year after the Tanzanian government adopted tougher mining regulations to try and squeeze more cash out of the miners operating in the country.
Two of Capital’s biggest customers, including PLC (), have been affected which is part of the reason that the drilling services group expects full-year revenues to now be at the lower end of guidance.
“The plunge from nearly 65p to barely 40p could prove overdone,” claims Mould.
“Two of Capital Drilling’s Tanzanian contracts relate to mines unaffected by the new rules and the firm is still very busy in Mauritania, Mali and Egypt.
“The company’s balance sheet is net cash, rig utilisation rates are still high and the consensus analysts’ forecasts suggest the valuation is low enough to potentially tempt a predator.”
Last year’s bidder could return with another offer for MP Evans
Like Burberry, palm oil producer () was also the subject of a takeover bid in 2016. It rejected a 640p per share offer from Kuala Lumpur Kepong Berhad (KLK) and Mould reckons the Malaysian outfit will come knocking once again.
“There has to be a chance that the suitor will return at some stage, especially as an investment by MP Evans in a new project in Indonesia adds to its crop growth potential and strategic attractions.”