Foreign Bids For UK Firms Roll In as Centamin Gets Offer – BNN Bloomberg

(Bloomberg) — UK-listed companies continue to be targeted by foreign bidders amid cheap valuations, potentially fanning concerns about a shrinking London market.

The agreement for Colorado-based AngloGold Ashanti Ltd. to buy Centamin Plc marks the 12th foreign takeover of a FTSE All Share Index company announced this year, including deals that have either completed or are pending, data compiled by Bloomberg show. Other targets have included Royal Mail Group Ltd. parent International Distribution Services Plc, beverage maker Britvic Plc and packaging firm DS Smith Plc. 

London’s reputation as a global venue for public companies and its attractiveness as an initial public offering destination is in question, with some firms such as Arm Holdings Plc, CRH Plc and Flutter Entertainment Plc favoring New York. On Tuesday, one of the top shareholders in flexible-office landlord IWG Plc urged the company to pursue a range of measures to boost its share price, including a US listing.

“It’s a continuation of trends given the low valuation of UK market versus that of the US,” said Janet Mui, head of market analysis at RBC Brewin Dolphin about Tuesday’s events.

Read: Will IPO Rush Pull London Stock Market Out of a Rut?: QuickTake

Discounted share prices in the UK continue to entice potential buyers. The FTSE All Share trades on about 12 times one-year forward earnings versus 21 times for the S&P 500.

The year-to-date tally of 12 deals is higher than the seven announced during the same period last year, but fewer than the 14 reported during the same period in 2022, the data show.

Some London brokers have previously warned that the city’s stock market could shrink further as takeover activity swells and a dearth in initial public offerings persists.

But the successful IPO of Raspberry Pi Holdings Plc and a barrage of market reforms aimed at boosting London’s appeal have started to raise optimism around new listings, broker Peel Hunt said last month.

“The UK economic outlook is more stable than in the recent past which is both promoting steady growth and also reducing market volatility — a scenario which typically provides good opportunity to raise new capital,” Adam Cox, Capital Markets Director at PwC, said.

France’s Vivendi SE has announced plans to float its Canal+ unit in London, while Greece’s Metlen Energy & Metals S.A. is also exploring a UK listing. 

British sports supplement group Applied Nutrition Ltd., backed by JD Sports Fashion Plc, has said it is preparing to go public in London. Fast-fashion giant Shein has also been eyeing the UK capital for a market debut, Bloomberg has reported.

London Stock Exchange remains Europe’s top exchange in terms of both money changing hands and money being raised. London is also a leading venue for mining firms, with stocks including Anglo American Plc and Glencore plc, while Centamin’s London-listed precious-metals peers include Fresnillo Plc and Endeavour Mining Plc.

While the pipeline of new listings is “probably not enough to offset” the loss of London names to New York and foreign buyers, the UK is still attractive for investors looking for dividends and a way to diversify away from US technology stocks, said Brewin Dolphin’s Mui. 

“UK equities are cheap, sterling is cheap — that’s great for overseas investors who want look elsewhere from the US,” she said. 

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