Bargain UK stockmarkets set for a boom in mergers and acquisitions
Bargain-hunters sense opportunity in UK stockmarkets: there have been 14 takeover deals in the past month alone.
The FTSE 100 has enjoyed its best month in 31 years. Britain’s blue-chip index gained 12.4% in November, adding more than £180bn to its market value. You would have to go back to January 1989 to find a more profitable month for UK investors.
Despite the gains, the FTSE 100 remains down 16% so far this year. The UK market “has been a dog” ever since the 2016 Brexit vote, says Russ Mould for AJ Bell. But as any investor knows, the aim of the game is to “buy low” and sell high. Bargain-hunters sense opportunity. There have been 14 takeover deals in the past month alone. To quote the writer Joseph Campbell, “the cave you fear to enter holds the treasure you seek”.
Private-equity firms have accumulated a global war chest estimated at $2.5trn, says Ben Martin in The Times. Recent bids for the AA and McCarthy & Stone show they are ready to spend in London. Data from Peel Hunt shows that there have been £22.8bn-worth of bids for London-listed firms since the start of August, never mind the awkwardness of negotiating a multimillion-pound acquisition over Zoom.
There could be more to come. Some potential buyers are reportedly holding back while London and Brussels hash out a deal. When there is more clarity on that point, they stand ready to swoop.