The Great British Buyout Binge
Britain has been invaded by buyout buccaneers! With conditions perfect, companies are striking while the iron is hot to buy British businesses. Could yours be next?
Thanks to Brexit, anything with a price tag in pounds looks cheap. The currency is worth less today than at any time in the past twenty years, and with the cost of borrowing so low, equally mute share prices on the country’s FTSE 100 stock exchange have led to a buyout fever!
When one firm goes shopping for another, investors in the acquiring company are faced with an immediate question; is the price right? That price will usually be at a premium to the current stock price, which leads to a delightful surprise for investors in the target company, whose stock will spike.
The law in most places states that a monopoly is illegal, as it would stifle the successful free market formula and thwart new start-ups at having a shot at the big time. This is why a buyout bonanza also gives government regulators work to do, either approving or refuting deals based on what’s fair.
Companies far and wide are welcome to tuck into British companies, binging on buyouts and gobbling up as many firms as their investors can stomach. However, acquisitions can go bad. Companies shouldn’t eat like there’s no tomorrow. There’s always a tomorrow, and the market won’t take kindly to a company that wakes up feeling it ate something terrible the night before!
Bottom line? British companies are flying off the shelves, and investors have already begun speculating on the next in line. It’s all to play for!
