French buyers acquired a slew of British assets on Wednesday, ranging from a slice of the UK’s largest telecoms group to the takeover of one of the country’s oldest tech companies, underscoring how foreign buyers are taking advantage of valuations depressed.
Entrepreneur Xavier Niel bought a 2.5% stake in Vodafone; Schneider Electric agreed to buy Aveva for £9.5 billion; and Suez decided to buy its UK waste treatment business for around $2.3 billion.
The UK is experiencing relatively high inflation, low investment confidence and a weaker currency, making it an attractive time for European suitors to pounce on troubled UK assets.
One of Aveva’s top 25 shareholders described Schneider’s bid as “another example of a UK-listed, world-leading company whose share price has been shattered in the course of redemption”. Aveva shares have fallen 23% in the past 12 months.
“As a beleaguered shareholder, we can accept it – just – with gritted teeth. But it is emblematic of what we have had to deal with,” they said. “There is a massive shift in ongoing ownership as the traditional owners of UK plc sell to corporates, sovereign wealth funds and private equity, which can profit from the poor valuation of UK equities.”
Top business leaders have been warning for weeks that UK assets are now increasingly vulnerable to outside interest, as the pound has fallen to its lowest level since 1985, and businesses have been hit by a pinch in the rising costs and falling consumer spending.
Andrew Truscott, head of UK investment banking at Citigroup, said: “Each of these situations has its own particularities and you can’t extrapolate too much, but what you can see is that it there is global recognition that businesses in the UK are cheap. There is no cash coming into the UK [stock] market. It’s money coming out,” he added.
Wednesday’s flurry of inbound French interest comes two months after state-backed French satellite group Eutelsat announced it was buying OneWeb, the UK space-based internet company rescued from bankruptcy by the government of Boris Johnson. OneWeb had struggled to raise capital to come to market with its constellation of satellites and become a viable stand-alone business.
Alongside Niel’s investment, French telecoms billionaire Patrick Drahi acquired an 18% stake in former British telecoms monopoly BT last year, sparking speculation that the veteran dealmaker is finally trying to take control. company total.
“Since Brexit, valuations are very low so there are a lot of companies listed in London that are very attractive financially,” said a French banker. “British businesses are suffering from the postponement of Brexit and the [falling] book therefore many foreign buyers scrutinize here, not only the French.
Additional reporting by Anjli Raval