Overseas predators target UK firms

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The Independent Online
Worries over Britain's attitude towards monetary union have not deterred foreign firms from rushing to snap up UK firms, making them Europe's number one takeover targets, a survey revealed today.

The study, for the corporate finance arm of accountants KPMG, found that sales of UK businesses to overseas buyers reached a new high of $38.5bn (pounds 23bn) in 1996, up 8 per cent on the previous year.

Some 5,500 cross-border deals were included in the survey. Foreign takeovers of UK firms exceeded the total for all the other European Union countries combined, the survey discovered.

The head of mergers and acquisitions at KPMG corporate finance, Stephen Barrett, said: "International companies evidently believe that the UK is the best base for expansion in Europe - and they are not being put off by the prospect of Britain missing the first stage of European monetary union."

American firms headed the spending spree, splashing out more than pounds 11bn on UK takeovers, particularly in the rush to buy regional electricity companies (RECs).

Among the RECs snapped up by US utilities were London Electricity, East Midlands Electricity and Northern Electric, although not without a protracted fight in Northern's case.

But while the world investment scene may continue to accelerate, Britain may see a slowdown in 1997, Mr Barrett said, as a hiatus inevitably comes with an election, regardless of the political outcome.

And because the RECs are mostly in foreign hands now, with only a couple still independent, the boost which came in 1996 will be missing.

While German and French firms cut their investment in the UK, other countries were waiting to take their places.

World-wide, only US firms topped the predators' preference for UK targets, attracting a record pounds 41bn worth of mergers.

The value of UK firms sold topped the level of foreign firms bought by British companies for the second year running.

In the buying stakes, Britain regained its appetite for overseas deals, spending more than pounds 20bn, up almost a quarter on the previous year. The US proved to be the top target for UK firms as acquisitions rose 25 per cent to pounds 9.3bn, followed by France, Germany and Australia.