Recent Bids
There has been a flurry of recent bids for UK listed companies, many of which were launched following the announcement1 in November 2020 by Pfizer and BioNTech which triggered the so-called ‘vaccine rally’.
In fact, there have been 13 bids announced for UK companies by private equity (PE) bidders in the first five months of 2021 alone.
The recent bids for UK listed companies have included:
- Allied Universal’s recommended bid for G4S, a FTSE 250 company. Allied Universal is a portfolio company of Warburg Pincus;
- Blackstone, GIP and Cascade’s recommended consortium bid for Signature Aviation, also a FTSE 250 company;
- TDR Capital and I Squared Capital’s recommended consortium bid for Aggreko, also a FTSE 250 company;
- Blackstone’s recommended bid for St Modwen Properties, also a FTSE 250 company;
- KKR’s recommended bid for John Laing, also a FTSE 250 company;
- CDR’s recommended bid for UDG Healthcare, also a FTSE 250 company;
- Carlyle’s recommended bid for Vectura, also a FTSE 250 company;
- Ramsey Health’s recommended bid for Spire Healthcare, and
- Fortress’s recommended bid for Morrisons, also a FTSE 250 company.
In addition, in May 2020 Cinven made various bid proposals to the board of Sanne and Lone Star made various bid proposals to Senior. Both Sanne and Senior are also FTSE 250 companies.
Recent Bids
There has been a flurry of recent bids for UK listed companies, many of which were launched following the announcement1 in November 2020 by Pfizer and BioNTech which triggered the so-called ‘vaccine rally’.
In fact, there have 13 bids announced for UK companies by private equity (PE) bidders in the first five months of 2021 alone.
The recent bids for UK listed companies have included:
- Allied Universal’s recommended bid for G4S, a FTSE 250 company. Allied Universal is a portfolio company of Warburg Pincus;
- Blackstone, GIP and Cascade’s recommended consortium bid for Signature Aviation, also a FTSE 250 company;
- TDR Capital and I Squared Capital’s recommended consortium bid for Aggreko, also a FTSE 250 company;
- Blackstone’s recommended bid for St Modwen Properties, also a FTSE 250 company;
- KKR’s recommended bid for John Laing, also a FTSE 250 company;
- CDR’s recommended bid for UDG Healthcare, also a FTSE 250 company; and
- Carlyle’s recommended bid for Vectura, also a FTSE 250 company; and
- Ramsey Health’s recommended bid for Spire Healthcare.
In addition, in May 2020 Cinven made various bid proposals to the board of Sanne and Lone Star made various bid proposals to Senior. Both Sanne and Senior are also FTSE 250 companies.
Bid Activity
We expect bid activity for UK targets, particularly FTSE 250 companies, to remain robust in the short to medium term. This is for various reasons:
- On various valuation metrics, the UK’s stock markets are materially cheaper than U.S. stock markets and stock markets in other international jurisdictions. By some estimates, on a forward P/E basis, the UK market trades at a 40% discount to the U.S. markets and is cheaper (in relative terms) than Italy and the emerging markets as a whole;
- Although the pound sterling has strengthened somewhat over the past six months or so, on a longer term basis the pound has fallen materially against the U.S. dollar and other currencies. It is often forgotten that the pound, now trading at around 1.4 USD, was trading at around 2 USD in 2007 and in 2014 was trading at around 1.7 USD;
- Some of the uncertainty around Brexit which had adversely affected the UK markets and the UK economy has diminished following the agreement reached between the UK and EU in December 2020;
- Having been hit hard during 2020 and early 2021 from the pandemic, rapid implementation of vaccination programmes has helped in the short term to significantly alleviate the adverse effects of the pandemic in the UK;
- The UK’s stock markets are made up of a high proportion of financial, mining, energy and other so-called ‘value’ and ‘cyclical’ businesses. These economically sensitive companies have been out of favour for a number of years. However, as the Chief Economist of the Bank of England has said, the UK economy is now expected to recover “at a rate of knots” from the second quarter of 2021, and, investors are increasingly looking to deploy capital into value and cyclical businesses. One leading hedge fund manager recently remarked that the FTSE 250 is “about the purest reopening trade in the world.”
- High levels of shareholder activism in the UK. On some metrics, the UK’s stock markets have had the highest levels of shareholder activism in the world in recent years. In particular, we expect shareholder activists to seek to initiate M&A in the UK market in relation to companies whose business plans have disproportionately suffered during the pandemic.
- PE firms, many of whom have a significant presence in London, have record amounts of dry powder and have been particularly active in UK take-privates over recent months.
We had a particularly successful year in M&A in 2020. In global M&A, we ranked 5th by value, working on 106 deals representing $333 billion of value. We also ranked 3rd overall in Europe by value in 2020. In the UK, we ranked 4th overall by value including securing a role on a number of the most significant transactions in the UK market including Euronext’s €4.3 billion acquisition of Borsa Italiana from the London Stock Exchange Group.
In addition, and most notably, we have also worked on a number of bids in the past few years (including some of the most significant and complex transactions), including:
- Acting for Cascade on the consortium bid for Signature Aviation referred to above;
- Acting for Allied Universal on its successful competing bid for G4S referred to above;
- Acting for Ivanhoe Cambridge on the consortium bid for EasyHotel;
- Acting for American Express in connection with the bid by Global Business Travel for Hogg Robinson plc;
- Acting for Fidessa in relation to recommended acquisition by Ion Investment Group and competing bid by Temenos; and
- Acting for Loxam on its successful competing bid for Lavendon
We had a particularly successful year in M&A in 2020. In global M&A, we ranked 5th by value, working on 106 deals representing $333 billion of value. We also ranked 3rd overall in Europe by value in 2020. In the UK, we ranked 4th overall by value including securing a role on a number of the most significant transactions in the UK market including Euronext’s €4.3 billion acquisition of Borsa Italiana from the London Stock Exchange Group.
In addition, and most notably, we have also worked on a number of bids in the past few years (including some of the most significant and complex transactions), including:
- Acting for Cascade on the consortium bid for Signature Aviation referred to above;
- Acting for Allied Universal on its successful competing bid for G4S referred to above;
- Acting for Ivanhoe Cambridge on the consortium bid for EasyHotel;
- Acting for American Express in connection with the bid by Global Business Travel for Hogg Robinson plc;
- Acting for Fidessa in relation to recommended acquisition by Ion Investment Group and competing bid by Temenos; and
- Acting for Loxam on its successful competing bid for Lavendon
Combined with our pre-eminent competition expertise globally, we believe our experience on some of the biggest and most complex bids in the UK market leaves very well placed to guide clients through the complexity of successfully implementing UK bids.
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