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Sterling plunge leaves FTSE 100 giants exposed to US predators

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Plunging value of pound puts slew of UK firms susceptible to being sold off to American predators

The plunging value of the pound has put a slew of UK firms susceptible to being sold off to American predators. 

Blue chip firms including gambling group Entain, packaging company DS Smith and telecoms behemoths BT and Vodafone are all now vulnerable to foreign corporate raiders, in accordance with experts at broker Canaccord Genuity. 

Big-name brands within the FTSE250 including betting business Playtech, cybersecurity outfit Darktrace, Greggs, MoneySuperMarket and data analytics firm Ascential are also in the road of fireside. 

Vulnerable: These leading British telecoms brands may very well be targets 

Market turmoil has sent the worth of many London Stock Exchange-quoted firms plunging. And the drop in the worth of the pound following the mini-Budget has made UK firms appear to be bargain buys for overseas opportunists. 

Nonetheless, enthusiasm for cutprice assets could also be dampened by the rise in rates of interest, which can make it dearer for personal equity firms to finance deals. 

Until recently, there was a spate of personal equity bids for large names including supermarket groups Asda and Morrisons and defence firm Ultra Electronics. 

Listed overseas firms including Schneider Electric of France – which has made a suggestion for software firm Aveva – have also been on the hunt within the UK. 

Graham Simpson from Canaccord said that because the UK stares down ‘the barrel of a recession’, bidders will probably be searching for firms with strong money flows, high profit margins and low debt that might ‘weather the inflation and rates of interest storm’. He added: ‘Private equity may struggle to boost finance. That is why we consider we can even see a possible wave of corporate mergers and acquisitions. UK valuations were very attractive even before the dramatic fall in sterling.’ 

Entain, which owns Ladbrokes, was cited as a goal by several analysts and brokers. Its shares have fallen by a 3rd this 12 months. 

One City source said: ‘Entain is unquestionably a goal and MGM – with which Entain runs a three way partnership – still has its eye on the corporate. It’s definitely more vulnerable now that it’s cheaper.’ 

One other said: ‘Entain is prone to be a goal since it’s gaming which is comparatively recession-proof.’ 

The source added that Darktrace – for which US private equity firm Thoma Bravo recently backed away from a bid – was still a probable candidate. Vodafone may very well be attractive to a US buyer, the source added. ‘Darktrace has been battered because it went public, so it might make sense, and Vodafone could occur sooner or later. Though Vodafone could be very big and really political – it might be a US buyer coming in, if anybody did.’ 

Analysts said takeovers of telecoms firms similar to BT and Vodafone, though tempting, can be complex. 

‘We see firms operating in food and health and wonder as takeover targets,’ said one other source. ‘You might be prone to see big players similar to Coca-Cola, Pepsi and McDonald’s seeking to pick up UK targets on the low cost.’

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