London’s stock market is bleeding market capitalization at a rate of more than $2 billion per week, and the cause isn’t a crash, a scandal, or a macro shock. It’s something arguably more concerning for the long-term health of UK equities: companies keep getting bought and taken off the exchange entirely.
The cumulative value of takeover deals involving London-listed companies has now crossed $60 billion, a milestone punctuated by OCS Group International Ltd.’s £3.1 billion ($4.2 billion) acquisition of Mitie Group Plc on July 21. That deal landed just days after ABB Ltd. revealed a $5.5 billion takeover of Rotork Plc. Arlington Capital Partners is also in the process of purchasing Gooch & Housego Plc for approximately £400 million.
The mechanics of the Great British Takeover
Foreign acquirers and private equity firms are finding UK-listed companies irresistibly cheap relative to their US or European peers. Market analysts have described this pattern as the “Great British Takeover,” with some characterizing it as “strip mining” — foreign entities attracted to the comparatively favorable valuations of UK businesses.
The Mitie deal is a useful case study. The facilities management giant was a FTSE 250 staple. Rotork, an industrial flow control specialist with a $5.5 billion price tag, is following the same exit path. The recent series of takeovers spans various industries including facilities management, industrial components, and photonics.
