Les Barclays (@lesbarclays): "Private equity’s liquidation of London continues, as highlighted in my quoted piece and throughout my ‘What’s Gone Wrong with Britain’s Capital Markets’ series. As Chris states: One day, there won’t be any decent London-listed companies left for private equity funds to buy. …"

Make money doing the work you believe in

Private equity’s liquidation of London continues, as highlighted in my quoted piece and throughout my ‘What’s Gone Wrong with Britain’s Capital Markets’ series.

As Chris states:

One day, there won’t be any decent London-listed companies left for private equity funds to buy. The latest attempt at a UK leveraged buyout may be remarkable for its size, but it otherwise conforms to a familiar pattern that’s seeing the market gradually liquidated by cash bids from buyout firms and foreign bidders.
[…]
Similar characteristics are found across other recent UK “take-privates,” whether it be Advent International’s agreement to buy aerospace contractor Cobham Ltd. in 2019, TDR Capital’s purchase of portable power generator Aggreko Plc in 2021, EQT’s deal for veterinary specialist Dechra Pharmaceuticals Ltd. in 2023 or KKR & Co.’s acquisition of engineer Spectris Ltd last year.
Defending UK firms against such bids has become formulaic. The bidder dangles a tentative offer at a conventional 30% to 40% premium. The board rejects the overture because the company’s starting market value is low and the mooted price falls short of its fundamental worth. Then comes a slightly higher offer and another rejection. The back and forth continues, invariably shifting to the public domain. The board knows the buyout firm needs any deal to be friendly. The premium may move above 50%, in some cases even 100%.

Because the UK [still] trades at a discount versus other developed economies, it has become a prime target for investors including PE. The most recent example is EQT’s improved £8.9bn bid for Intertek. The leaked takevoer news from a local news station in Argentina reads as clear gamesmanship from EQT to pile public pressure on Intertek while still appearing a friendly suitor to the target board. But Intertek had it coming; it’s a perfect PE target due to recurring cash flows, low debt, and underperforming despite a structurally healthy albeit low growth business.

Les Barclays

bloomberg.com

Private Equity’s Liquidation of London Goes On

One day, there won’t be any decent London-listed companies left for private equity funds to buy. The latest attempt at a UK leveraged buyout may be remarkable for its size, but it otherwise conforms to a familiar pattern that’s seeing the market gradually liquidated by cash bids from buyout firms an…

May 13

5:00 PM

Make money doing the work you believe in

Log in or sign up