Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
Find up-to-date guidance on points of law and then easily pull up sources to support your advice with Lexis PSL
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
There has been an increase in foreign investment made in the UK with a greater number of offers being made in dollars as opposed to sterling. US private equity fund Thomas Bravo LLC made an offer for Sophos Group plc for $3.8 billion (£3.01 billion) whilst a consortium consisting of US, Canadian and British private equity funds made an offer for Inmarsat plc with an offer price of $3.4 billion (£2.6 billion). The consideration to shareholders was offered in dollars rather than sterling suggesting a need to hedge against currency risk, although it should be noted that both Sophos Group and Inmarsat report their financial results in dollars.
A weaker pound and the availability of cheap debt has piqued the interests of foreign bidders to acquire public companies in the UK. However, Brexit uncertainty and the consequent volatile movements of sterling has meant that bidders might increasingly be looking for ways to reduce exposure to a decrease in the value of the pound.
Both of the firm offers were made around the Brexit deadlines, with Inmarsat’s offer announced on 25 March 2019, four days before the first Brexit deadline of 29 March 2019 and the firm offer for Sophos Group announced on 14 October 2019, just over two weeks before the 31 October 2019 exit date which has recently been extended.
Conversely, several other offers were made in the form of sterling but bidders paying to hedge against movements in the exchange rate may find that the costs of doing so are significantly higher than if they made the offer in dollars. Hasbro, Inc. acquired Entertainments One and it paid £16.2 million ($20.9 million) after tax charge in relation to foreign currency hedging.
It therefore seems that the choice of paying the consideration in dollars is being used to hedge against a currency swing that might be caused by Brexit or the uncertainty related to it. Rather than pay in sterling and additionally pay to hedge against currency risk, these bids shift this risk onto UK shareholders.
Market Tracker will continue to monitor this development.
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
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.
0330 161 1234