With pound under pressure, foreign buyers are snapping up British companies

August 25
15:52 2019

U.K. PLC is up for sale.

That’s the message foreign buyers are receiving as they rush to scoop up U.K.-listed companies taking advantage of the slump in sterling GBPUSD, +0.2531%   against the U.S. dollar in the run up to the October 31 deadline for Britain’s exit from the European Union.

From toys and pubs to aerospace and defence, companies across a diverse range of sectors have been snapped up in recent weeks as the U.K. hurtles towards a disorderly Brexit.

Hasbro HAS, -8.94%  , the U.S. toy maker of Monopoly and My Little Pony, became the latest target on Thursday when it made a knockout £3.3 billion takeover bid for Entertainment One ETO, -1.10%  . Just days earlier, the real-estate investment firm owned by Hong Kong tycoon Li Ka-shing splashed £4.6 billion to buy Greene King GNK, -2.51%  , the U.K.’s biggest listed pubs and brewery group.

That brings the total value of announced U.K. inbound deals to $ 66 billion so far this year, according to data from Dealogic. Around $ 16 billion of those have been struck since Boris Johnson took over as prime minister from Theresa May in July.

Other high-profile British deals in the past two weeks include the £5bn merger between TKWY, -0.06%  of the Netherlands and London-listed Just Eat JE, -0.36%    to create the biggest online food delivery, overtaking Uber Eats.

Foreign exchange markets have been betting heavily against sterling since July when Johnson became prime minister. Investors are increasingly concerned that he will exit the EU without an agreement – a so-called “no-deal” scenario – which would see the British pound fall further.

Mergers and acquisitions are one of the quickest ways for companies to juice their revenues in the short-term as they look to grow their profits amid a slowing global economy.

Private equity, which is sitting on more than $ 2 trillion of unspent cash according to Preqin – is also contributing to the rise in dealmaking as they take U.K. listed companies private.

In June, Lego’s founding family teamed up with U.S. buyout group Blackstone to pay just under $ 6 billion to take Merlin, the owner of Legoland and Madame Tussauds, off the stock market. That same month, TDR Capital made a $ 2.4 billion all-cash offer for BCA MakertPlace BCA, +0.00%  which owns the second-hand care dealing website WeBuyAnyCar.

Some deals are facing scrutiny over national security concerns. The U.K. government is currently looking into concerns that the £4 billion buyout of U.K. aerospace and defence supplier Cobham COB, +0.00%   could impact the country’s skills and manufacturing base.

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