More UK firms could be taken over and leave the London stock market, say experts
THE City has been warned more British companies could fall prey to takeovers and be whisked off the London stock market.
After a year-long drought of deals, a double dose of takeovers was announced yesterday with knock-out premiums to their share prices.
But bankers said this merely showed how undervalued London companies had become.
Richard Bernstein, boss of fund manager Crystal Amber, warned there were “so many other sitting ducks”.
He wrote online that the 375p-a-share Hotel Chocolat takeover showed “the absurdity of UK small cap valuations”.
Hotel Chocolat, owned by Angus Thirlwell, agreed to sell itself to US choc giant Mars for a 170 per cent premium at £534million.
Meanwhile City Pub Group, run by Made In Chelsea star Lucy Watson’s father, Clive, sold for £162million — a 50 per cent premium — to brewer and pub chain Young’s.
Mr Bernstein said of the Hotel Chocolat deal: “If Mars thinks the business is worth 375p, it is.”
Dr Naaguesh Appadu, research fellow at Bayes Business School, said: “These premiums are bear-hugs.
“It’s a steal compared to where the companies had been trading.”
Susannah Streeter, head of markets at Hargreaves Lansdown, said of the Mars deal: “This is likely to continue to rattle nerves about an exodus from London.”
Banking sources said that after months of inactivity, work was being done behind the scenes which would lead to a flurry of takeovers of businesses in 2024.
Yesterday’s deals came as City big-hitters sent a letter to Chancellor Jeremy Hunt calling for urgent reform of pension fund investments in UK companies.
The letter said the dwindling investment into British business “starves our companies of financing, diverts UK taxpayer support to non-domestic companies and impacts our markets”.
One signatory, Mark Austin, of law firm Lathum & Watkins, told UK Times: “We have amazing companies in the UK but we need to invest in ourselves more.
“That includes driving liquidity into our companies so they trade at higher valuations and are less vulnerable to being taken over.”
Burberry shares in trenches
SHARES in Burberry took another bruising yesterday as it warned high-end shoppers were reining in their spending.
Luxury companies have suffered a global slowdown, caused by China’s sluggish recovery from the pandemic and a dip in US demand.
Designer trenchcoat-maker Burberry saw its shares slip by as much as 10 per cent after it said it was unlikely to meet profit expectations this year.
Boss Jonathan Ackroyd blamed cost-of-living pressures making shoppers more cautious, along with high inflation making its goods even more expensive.
Russ Mould, analyst at AJ Bell, said that while wealthy shoppers are usually “seen as insulated…apparently they are feeling some of the pain”.
Burberry saidsales had risen by 4 per cent to £1.4billion in the past six months, but had fallen far short of its hopes for sales growth of 10 per cent.
SE water torture
REGULATOR Ofwat has launched an investigation into England and Wales’s “worst” water company.
South East Water, which has 2.2million customers, has been ranked as the worst performer for water supply interruptions, with homes going for weeks without water.
Some schools were forced to shut because of shortages and there were hosepipe bans.
Ofwat said customers had been “failed too often”.
Home loan win
MORE lenders have slashed their mortgage rates below 5 per cent in a watershed moment for homeowners.
Halifax, HSBC, Yorkshire Building Society, Virgin Money and Bank Of Ireland are all offering new two-year fixed rate deals under 5 per cent.
The falls come as lower inflation figures have led to hopes the Bank of England will lower interest rates by next spring.
So lenders are confident that they won’t lose money if they become more competitive on home loans again.
Class pay gap shame
WORKING-class professionals are typically paid £7,575 less a year than their more privileged peers.
A campaign by the Social Mobility Foundation said this “class pay gap” means working-class staff effectively work from today till New Year for free.
ROYAL MAIL will hand its posties a £500 bonus for delivering letters and parcels on time, despite its cash woes.
Eighteen days of strikes threw Christmas deliveries into chaos last year, leading to a £5.6million fine.
The company is hiring an extra 16,000 seasonal workers to avoid a repeat of last year.
Meanwhile, Royal Mail’s losses have risen to £319million.
The business is trying to get out of an obligation to deliver letters six days a week, arguing that delivering on Saturdays is not sustainable.
Cheaper cakes & noodles
THE price of Mr Kipling’s cakes and Batchelors Super Noodles is finally coming down.
Premier Foods, which hiked prices on some products by as much as 75 per cent earlier this year, said it was passing on lower ingredient and energy costs to shoppers.
Prices on its noodle pots and Mr Kipling cake slices are back down to last summer’s prices.
Premier Foods got a big boost from the price hikes, with profits rising 38 per cent to £58million in the six months to the end of September.
Boss Alex Whitehouse said Premier Foods would “sharpen pricing where we can” and that Bisto gravy and Ambrosia custard brands would probably be the next to fall in price.
The cuts come a day after official figures show that food inflation has eased to ten per cent.
Prices remain 16 per cent higher than a year ago.
Energy cost jump
THE energy price cap will rise again in January, Cornwall Insight predicts.
The analyst says the cap will leap from £1,834 to £1,931 for January to March, meaning bills for millions of homes are still far higher than pre-Covid.
BT chief Jez call
OUTGOING BT boss Philip Jansen wants Chancellor Jeremy Hunt to make tax incentives for firms permanent, to encourage investment.
BT is spending £300million a year rolling out its fibre network and has said full expensing and super deduction, both of which allow lower taxes on investment, have been critical.
Mr Jansen blogged: “With billions of pounds of potential investment at stake, it’s important to ask whether, as a country, we can afford not to.”
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