Weakened GBP Leaves UK Companies Vulnerable to Foreign Acquisitions

Image

ARM Holdings PLC, a Cambridge based technology design company have recently agreed acquisition terms with the Japanese telecommunications giant Softbank Group Corporation. The £24.4 bn deal will see Softbank take over as owners of ARM, however ARM’s CEO, Simon Segars has announced that there will be no change in the way ARM is managed, or in its business model going forward. Segars also explained that the only major change that ARM will implement over the next 5 years is to double the amount of people it will employ, both in the UK and overseas.

Why are UK Companies Attracting Overseas Investors?
Coming so soon after the Brexit vote and the resulting drop in the strength of the GBP, many are wondering if the weakened GBD is likely to lead to more acquisitions of UK companies and whether this is a good thing or not.

UK companies are currently an enticing prospect for overseas investors and the reason for this is that they can get better value for money while the GBP remains weak compared to other currencies. What cost £24.4bn today could be worth much more tomorrow, should the GBP rise in value and so effectively the weakened GBP means that UK companies can be bought at discount prices. It also means that in terms of imports and exports UK companies may struggle to be competitive in the short term.

Business Solutions
There are companies, however, who can ease the burden of the weak GBP and Ebury are one such company. Ebury are a business solutions company and one of the areas they specialise in is currency. Businesses can get access to competitive rates on currencies and therefore operate more competitively when importing and exporting. Other solutions could include a government fronted strategy for bringing back much of the lost manufacturing business back to UK soil. This would take time and would not put an immediate halt to the acquisition of UK businesses, but the message it would send out may make foreign investors think twice.

The Great British Sell Off
Prime Minister Theresa May announced in July that she would be taking measures to make sure that the acquisition of UK companies was in the interests of the UK economy before they could go ahead. May did however welcome the news of the Softbank takeover of ARM.

May’s announcement has yet to be acted upon and in the meantime more UK companies are being bought by overseas investors. Recently, UK pharmaceutical group AstraZenica announced that it was to sell its anti-biotics division to American Viagra producers Pfizer and Poundland is being sold to South African conglomerate Steinhoff.

If we are not to see the UK business sector decimated by foreign takeovers, then maybe the first thing to be done rests with the people who own desirable UK businesses. If the directors of successful UK companies say no to foreign investors and focus more on collaboration, then perhaps we can stay in control of businesses and progress at the same time.

Share this page:

In this section

Tristan Nagler Joins Aurelius Investments

Tristan Nagler joined Aurelius Investments, London, on 2 January 2014 as Managing Director.

READ MORE →

Ride a White Swan

Instead of obsessing on the unpredictable, investors should look to the positive environment they see in front of them.

READ MORE →

Loans: A Tactical Investment Opportunity

More than five years on since the inception of the Insight Loan Fund, its manager Ranbir Singh Lakhpuri believes loans remain both a tactical and strategic investment opportunity for 2014 and beyond.

READ MORE →

Genii Capital Appoints Andrew Ruhan

Genii Capital SA has appointed Andrew Ruhan as Partner. This appointment will enable Genii to strengthen and broaden its reach in the real estate, oil and gas, automotive and financial services sectors.

READ MORE →

Spain’s Largest SICAV Doubles Assets

Spain’s largest SICAV Torrenova, has doubled assets over the past year as European investors seek growth with security in a total return environment.

READ MORE →

H.I.G. Capital Strengthens London Team

H.I.G. Capital has announced that Johannes Huttunen and Johan Pernvi have joined the London team.

READ MORE →

News Stand

View more → Sign up to receive new issues →