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City comment: Selling England by the pound never been cheaper

Simon English
·2-min read

How much of corporate Britain is for sale?

Perhaps it would be an easier exercise to say which bits definitely aren’t.

William Hill looks like it is going to one of two American groups, Arm Holdings is already on the way.

ITV is always a mooted target. But let’s be imaginative. How about Morrisons (come on), Whitbread (cheeky), or Rolls Royce (be serious).

Boards faced with takeover bids always like to say that such offers are “opportunistic”, that they come merely as the result of a low share price and therefore undervalue the business. No board has ever regarded a hostile bid as overvalued, let us note.

What the bids we know about and the ones to come show is that foreign investors think Britain’s top companies are in rather better shape than the stock market says.

You could take heart from this. Plenty of serious people with loads of cash think we will come through Covid-19, Brexit and even Boris just fine.

It is a shame UK investors don’t presently feel the same, but there you go. Perhaps that’s our natural British pessimism.

Perhaps another reason for optimism is that lots of those deals, real and imagined, are partly property plays.

Private equity bidders think our offices, shops and town centres are worth more than we do.

When Hong Kong’s CKA bought Greene King last year some wondered what it wanted with a bunch of middling half-empty pubs, even before the pandemic made visiting them somewhere between illegal and unpleasant.

Perhaps what CKA really did was buy a property business that had some pubs attached. Neil Wilson of markets.com notes: “You could see Morrisons and Whitbread in this light.”

What else could go? Well, BT seems likely to face a bid. Burberry looks vulnerable. And British banks are really cheap.

Selling (or buying) Britain by the pound never looked easier.