Foreign companies in UK shopping spree

Foreign companies in UK shopping spree

Investors continue to take advantage of a weakened sterling, as the fourth quarter sees an influx of foreign bidders, continuing the trend noted in the Market Tracker Q3 2020 M&A update.

Of the five firm offers that have been announced since 1 October 2020, all consist of non-UK bidders, with four of the offers being made by US bidders. Private equity firm Lone Star Real Estate Fund VI made an offer for McCarthy & Stone on 23 October (see Lone Star swoop in on struggling McCarthy & Stone), healthcare and research giant, PerkinElmer Inc, made a successful £284m takeover bid on 2 November for biotech company Horizon Discovery Group plc, and Waterfall Asset Management made a firm offer of £640m for investment trust Alternative Credit Investments (formerly known as Pollen Street Secured Lending) on 3 November, bringing a head to negotiations that began at the end of February 2020 (for more on this story see Bidders buzzing for Pollen Street and Pollen Street Secured Lending determined to keep conversation going). In addition, medical manufacturer Masimo Corporation put forward a bid for UK medical manufacturer LiDCO Group plc. The offer values LiDCO at £31m, representing a 78% premium to its closing price on 30 October 2020 (being the last business day before the announcement).

The fifth firm offer comes from joint bidders from Kazakhstan for FTSE 250 copper miner, Kaz Minerals. The bidders consist of the company’s Chair, Oleg Novachuk, and director and former Chair, Vladimir Kim, who have a joint interest of almost 40% in the company and have made an offer valuing the company at £3bn. The transaction is the largest of 2020 to date, edging out G4S’ £2.97bn offer for Garda World Securities, and Caesar World Entertainment’s £2.9bn offer for William Hill, where the bidders in both cases were US based.

Explaining the rationale behind the buy-out, the bidders explain that, despite the success of Kaz Minerals as a publicly listed company over the last 15 years, ‘driven by the current market uncertainty and the corporate circumstances of sequential development projects, we believe that [the company’s] long term interests would be best served as a private company’. The bidders go on to explain that its current high-risk strategy may be ‘misaligned with the preference of many investors in the mining sector’.

Alongside this, Internet of Things (IoT) company, Telit Communications plc has found itself amidst a potential bidding war as it confirmed on 3 November that it is in receipt of two preliminary approaches regarding a possible takeover offer.

One of the potential offerors is US IoT solutions company, Lantronix Inc. After considering the offer alongside its financial advisors, Rothschild & Co, Telit eventually rejected the initial proposal, although the announcement provided no further reasons as to why. Despite this, Lantronix and Telit remain in discussions, hoping to explore a possible tie up that may be of interest to shareholders. Telit’s other potential suitor comes in the form of Isle of Man fund managers DBAY Advisors limited. This would not be the first time that DBAY has been caught competing for a company, as last year it was locked in a three way battle for Eddie Stobart with Wincanton plc and TVFB (3) Limited. Both companies will have until 1 December 2020 to confirm whether they will be making a firm offer.

To date, the final quarter of 2020 has seen only one other UK bidder* of the four possible offers announced. This is fund manager Toscafund Asset Management’s possible offer for FTSE 250 TalkTalk Telecoms Group plc valued at an estimated £1.1bn. For more on this, see TalkTalk in takeover conversation with Toscafund. The remaining possible offer announced this quarter, is an unsolicited approach on 9 October by US security company, Allied Universal Security Services, who, should a firm offer by made, would be competing with fellow US security company, GardaWorld Securities for FTSE 250 security giant G4S plc. The board of G4S have advised shareholders to reject both offers, believing that the offers under value the company. See Allied Universal expresses its interest as the battle between G4S and Garda heats up, for more on this.

Market Tracker will continue to monitor this trend as it develops.

*Isle of Man is considered part of the UK for the purposes of this article.

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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.