British companies have been labelled ‘sitting ducks’ as foreign predators hunt takeover bargains in London.
The swoop on Anglo American – the second FTSE 100 firm to receive a takeover bid this year – has sparked speculation over which company will be next.
City analysts think vulnerable blue-chip stocks include BP, Unilever, BP, Reckitt Benckiser, Standard Chartered, Entain and Burberry, (whose values are listed above).
Other targets include names such as Dr Martens and Aston Martin, according to AJ Bell, which said companies are under threat mainly because they are undervalued in the UK market but have strong brand value.
Dan Coatsworth, of AJ Bell, said: ‘Publicly, these companies might give the impression everything is fine but behind closed doors management could be worried they are sitting ducks for predators seeking bargains.’
City analysts think vulnerable blue-chip stocks include BP, Unilever, BP, Reckitt Benckiser, Standard Chartered, Entain and Burberry
Susannah Streeter, analyst at Hargreaves Lansdown, said predators eye bigger firms to get immediate bang for their buck.
‘Overseas buyers are still likely to steer more clear of growth stocks offering the promise of jam tomorrow and focus on those offering jam today in terms of solid earnings,’ she said.
Abrdn investment manager Sasha Kachanova said: ‘Burberry remains a potential takeover target, particularly at its current valuation.’
The speculation comes as FTSE 250 music firm Hipgnosis is at the centre of its own bidding war.
The group, which owns the song catalogues of the likes of Beyonce and Blondie, yesterday backed an increased offer from rival Concord, valuing it at £1.2billion.
It previously backed a separate bid from private equity titan Blackstone. But takeover tussles have become the norm.
Packager DS Smith, telecoms firm Spirent Communications and haulage firm Wincanton have fallen to overseas bidders.
Insurer Direct Line and electrical retailer Currys have fended off recent approaches.
The sorry state of affairs has led to some experts warning that the London stock market is facing ‘death by a thousand cuts’.
There are growing concerns in the City and Westminster that there is a lack of investment in UK stocks which has left them undervalued and vulnerable.
And some companies, including Paddy Power-owner Flutter, building supplier CRH and plumbing group Ferguson, are leaving London to list elsewhere, such as New York.
A further concern is the lack of companies joining the stock market through so-called initial public offerings.
In a report, Peel Hunt has warned that an index of small UK firms could be wiped out in four years in a ‘feeding frenzy’.
Brokers say the FTSE Small Cap will cease to exist if ‘relentless’ merger and acquisition activity continues.
The index, made up of firms on the UK main market that are not big enough for the FTSE 100 or FTSE 250, has seen numbers drop from 160 in 2018 to 114 last year. ‘If we extrapolate the current trend, the last company will leave in 2028,’ its report said.
The prospect of a big hitter such as BP and Unilever being snapped up prompted an intervention from one of Britain’s best-known stock-pickers this week.
Nick Train, of Lindsell Train, this week said a bid for a ‘substantive UK company’ could change investor sentiment about unloved domestic shares.
