HomeMost Popular The UK Takeover Tango: Boards Reject Bargain Bids

The UK Takeover Tango: Boards Reject Bargain Bids

Actionable Trade Ideas

always free

Boards Battling Bargain Bids

Rebuffing low valuations, UK-listed companies like Currys and Direct Line have reignited the fervor of takeover battles. The rejection of offers deemed insufficient echoes a symphony of boards guarding their assets from opportunistic predators.

Struggling Markets Seek M&A Revival

Amid a global slump in dealmaking reminiscent of 2013 lows, the private equity landscape faced a drought, with financial sponsors shying away from leveraged buyouts. In this parched terrain, UK takeover activity surged, luring bidders with the promise of bargain hunting amidst the modest valuations of FTSE 100 and FTSE 250 members.

Valuation Wars: Premiums Put to the Test

Traditionally, investors anticipate a takeover premium of around 30% of a company’s market capitalization. Yet, in the current climate, even heftier premiums are met with nonchalant disdain. A 50% premium may falter in the face of historical valuation norms, leaving suitors floundering in the tempest of boardroom rejections.

Market Maneuvers and Rule Rumbles

The battleground of boardrooms witnesses tactical plays, with premature disclosures and regulatory constraints complicating the delicate dance of acquisitions. The stringent UK takeover rules add a layer of complexity, forcing bidders to swiftly reveal their cards or gracefully bow out of the fray.

Strategies Shift Amidst Uncertainty

Faced with rising borrowing costs and market uncertainties, bidders pivot to novel approaches like the β€œprivate bear hug,” seeking solace in the embrace of influential shareholders. As interest rates waver and financing markets navigate choppy waters, the anticipation of heightened dealmaking remains tempered by the realities of execution time.

Market Oscillations: A Tale of Underperformance

Reflecting on the past five years, British shares languish in the shadow of their U.S. and European counterparts, showcasing a narrative of underperformance amidst the tumult of market dynamics and strategic maneuvers.

(Reporting by Amy-Jo Crowley and Andres Gonzalez in London. Additional reporting by Alun John; Editing by Anousha Sakoui and David Evans)

(([email protected]; +44 (0) 7551 790019; Reuters Messaging: [email protected]))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.