Foreign firms targeting UK brands

06 July 2012

LONDON: Increasing numbers of large UK brand owners are being targeted for purchase by foreign companies, figures from Experian, the information provider, show.

A total of 24 mergers and acquisitions worth at least £1bn were announced in the UK in the first half of 2012, versus 18 in the same period of 2011. These transactions had a combined value of £92.3bn, an improvement from £51.3bn.

More specifically, 16 of these agreements involved the proposed acquisition of British firms by overseas players, a lift from just eight in H1 last year.

Wendy Driver, business development manager at Experian UK & Ireland, told the Financial Times: "The number of multi-billion pound deals ... highlights an increased interest in the UK market and reflects the quality of UK businesses."

The primary examples of this trend include China Investment Corporation, a sovereign wealth fund, which made its first UK investment in obtaining an 8.7% stake in Thames Water.

Bright Foods also recently took over Weetabix, which manufactures breakfast cereals, for £1.2bn, the most expensive such move from a Chinese firm in the overseas food and beverage market.

Elsewhere, GDF Suez, the French energy group, paid £6.4bn to assume full control of International Power, of which it already held 70%.

Last month, Walgreens, the US pharma chain, revealed it planned to spend $6.5bn in cash and shares on 45% of Alliance Boots, its British counterpart.

The UK's strong performance in this area was not mirrored worldwide, where the relative paucity of big deals contributed to a decline in activity topping 20%, to $931.4bn.

Overall, the mergers, acquisitions, floatations, rights issues and placements tracked in the country during the first half reached a value of £141bn, up by 29%.

Some 47% of all transactions taking place in Europe had a British component, an increase from 43% the previous year, Experian's study added.

Data sourced from Financial Times/Private Equity Wire; additional content by Warc staff