By Lina Saigol
Just Eat. G4S. The London Stock Exchange.
These are some of the U.K.-listed companies that have been targeted by hostile bidders in the past year, as foreign buyers took advantage of depressed valuations to expand their growth.
There were 12 hostile bids, including unsuccessful attempts, out of a total of 77 for British companies in the 12 months to Oct. 31, accounting for 16% of the total, according to research from international law firm Pinsent Masons.
That compares with nine hostile bids out of 57 for the same period a year earlier — almost the same proportion of total deal volume as the past 12 months.
Concerns that the pound is beginning to rally may also have pushed more bidders to go “hostile” now rather than enter lengthier rounds of negotiations needed to achieve a recommended bid.
The pound rose as high as $1.3515 after the Conservative Party’s resounding victory on Friday, up from $1.3164 the day before.
Last week, Just Eat rejected a renewed attempt by Prosus, the Netherlands-listed investment vehicle of South Africa’s internet group Naspers /zigman2/quotes/205954517/delayed ZA:NPN -2.16% , to break up the U.K. food delivery company’s £8 billion planned merger with Dutch rival Takeway.com.
Prosus /zigman2/quotes/214038022/delayed NL:PRX -1.74% had increased its cash offer for Just Eat by 30p to 740p a share. However, the board of Just Eat said it still backed Takeaway’s /zigman2/quotes/201653805/delayed NL:TKWY -0.51% all-share offer because it believed it would offer more upside for shareholders in the long term. Both bidders are yet to declare their offers as final.
“If the valuation gap between U.K. PLC and their peers in the U.S. and elsewhere widens further then we can expect to see more hostile bids,” said Julian Stanier, partner at Pinsent Masons.
However, hostile bids are notoriously tricky to pull off. In October, the Hong Kong stock exchange abandoned its £32 billion takeover offer for the LSE /zigman2/quotes/206625606/delayed UK:LSE -0.71% after being unable to engage with the target company’s management. The London bourse had already agreed a $27 billion deal to buy financial data terminal provider Refinitiv, which shareholders overwhelmingly backed in November.
In May, Canadian security company GardaWorld decided not to move forward with a cash offer for its British rival G4S /zigman2/quotes/202248409/delayed UK:GFS +0.56% , which had posted a 63% fall in full-year pretax profits a month earlier after it was forced to settle a lawsuit with thousands of employees over lost meal and rest breaks.