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The Star
13-06-2025
- Business
- The Star
As global tumult grows, UK Plc's stability, bargains appeal to dealmakers
MORE than US$10bil in bids for British companies announced on Monday, this year's busiest day according to Dealogic data, shows how low valuations and the market's relative stability were attracting rivals and funds after a volatility-induced pause. Companies may also be using the opportunity to enter the United Kingdom market before potential further weakening of the dollar or strengthening of the pound made future transactions more expensive, analysts said. Takeover offers Among those to announce takeover offers for UK firms on Monday were US chipmaker Qualcomm, private equity firm Advent, and France's L'Oreal. While US President Donald Trump's announcement of sweeping tariffs and the resulting volatility hampered dealmaking for weeks, some companies are now finding the right conditions to agree on transactions. Niccolo de Masi, CEO of Maryland-based IonQ, which on Monday announced a US$1.08bil acquisition of British quantum computing firm Oxford Ionics, said that in addition to Britain's talent pool, the geopolitical backdrop made the deal more compelling as governments want more 'sovereign quantum networks,' he said. 'People want things on-premise and they want things to be local,' de Masi told Reuters. So far this year, there have already been 30 bids for UK companies valued at more than £100mil (US$135mil), compared with 26 over the same period of last year and 45 for the whole of 2024, according to Peel Hunt. Compelling deals The total value of £24bil of deals announced to date compared with £36bil in the year-ago period, which was skewed by a few large deals, such as International Paper's US$7.1bil bid for D.S Smith. Years of outflows from UK equities that depressed valuations for British companies compared with their competitors listed on other European or US exchanges, have played a role in making them more attractive as acquisition targets. For example, the discount between the FTSE 100 and the US S&P 500 benchmarks peaked at about 49.5% in January and is about 41% now. 'Management teams have been happier to accept bids because sometimes that is an easier way to crystallise the valuations and as equity markets have been so challenging for so long,' said Amanda Yeaman, the co-manager of the abrdn UK Smaller Companies Fund and the abrdn UK Smaller Companies Growth Trust plc. Moreover, bidders are being drawn to a relatively stable UK economic and political backdrop. 'We now have an improving economic environment in the United Kingdom, and the regulatory position is much more predictable,' said Charles Hall, head of research at Peel Hunt. Less risky 'Buying a UK company at the moment is likely to be less risky than, say, buying a US business.' The trade deals that Britain has pursued also show the country is 'open for business,' Yeaman said. And with no general election due soon, Britain promises political stability. 'Our markets really like stability and for the next four years, that is something that we have, which is less predictable in other geographies,' she said. Analysts also say the pound's strength does not seem to act as a deterrent. 'Particularly global investors, US investors are thinking, let's grab as much as we can before things get more expensive and currency tailwinds are still there,' said Magesh Kumar, equity strategist at Barclays. This year's largest bids so far were all announced this week, with Advent offering £3.7bil for scientific instruments maker Spectris and Qualcomm's £1.8bil bid for Alphawave, and some advisers expect many more to come. Erik O'Connor, partner at Clifford Chance, said that while economic uncertainties could weigh on the merger and acquisition market, factors such as more predictable outlook for interest rates and UK companies' improved balance sheets should encourage dealmaking. 'There's a sense that key fundamentals are in the right place to transact,' O'Connor said, pointing to technology and real estate, the busiest sectors so far this year according to Dealogic, as those less susceptible to recent market volatility. 'I would not be surprised if we continue at a similar pace,' he said. — Reuters Amy-Jo Crowley, Yadarisa Shabong and Purvi Agarwal write for Reuters. The views expressed here are the writers' own.
Yahoo
12-06-2025
- Business
- Yahoo
Analysis-As global tumult grows, UK Plc's stability and bargains appeal to dealmakers
By Amy-Jo Crowley, Yadarisa Shabong and Purvi Agarwal LONDON (Reuters) -More than $10 billion in bids for British companies announced on Monday, this year's busiest day according to Dealogic data, showed how low valuations and the market's relative stability were attracting rivals and funds after a volatility-induced pause. Companies may also be using the opportunity to enter the UK market before potential further weakening of the dollar or strengthening of the pound made future transactions more expensive, analysts said. Among those to announce takeover offers for UK firms on Monday were U.S. chipmaker Qualcomm, private equity firm Advent, and France's L'Oreal. While U.S. President Donald Trump's announcement of sweeping tariffs and the resulting volatility hampered dealmaking for weeks, some companies are now finding the right conditions to agree on transactions. Niccolo de Masi, CEO of Maryland-based IonQ, which on Monday announced a $1.08 billion acquisition of British quantum computing firm Oxford Ionics, said that in addition to Britain's talent pool, the geopolitical backdrop made the deal more compelling as governments want more "sovereign quantum networks," he said. "People want things on-premise and they want things to be local," de Masi told Reuters. So far this year, there have already been 30 bids for UK companies valued at more than 100 million pounds ($135.44 million), compared with 26 over the same period of last year and 45 for the whole of 2024, according to Peel Hunt. The total value of 24 billion pounds of deals announced to date compared with 36 billion pounds in the year-ago period, which was skewed by a few large deals, such as International Paper's $7.1 billion bid for D.S Smith. Years of outflows from UK equities that depressed valuations for British companies compared with their competitors listed on other European or U.S. exchanges, have played a role in making them more attractive as acquisition targets. For example, the discount between the FTSE 100 [.FTSE] and the U.S. S&P 500 [.SPX] benchmarks peaked at about 49.5% in January and is about 41% now. "Management teams have been happier to accept bids because sometimes that is an easier way to crystallize the valuations and as equity markets have been so challenging for so long," Amanda Yeaman, co-manager of the abrdn UK Smaller Companies Fund and the abrdn UK Smaller Companies Growth Trust plc. Moreover, bidders are being drawn to a relatively stable UK economic and political backdrop. "We now have an improving economic environment in the UK, and the regulatory position is much more predictable," said Charles Hall, head of research at Peel Hunt. "Buying a UK company at the moment is likely to be less risky than, say, buying a U.S. business." The trade deals that Britain has pursued also show the country is "open for business," Yeaman said. And with no general election due soon, Britain promises political stability. "Our markets really like stability and for the next four years, that is something that we have, which is less predictable in other geographies," she said. Analysts also say the pound's strength does not seem to act as a deterrent. "Particularly global investors, U.S. investors are thinking, let's grab as much as we can before things get more expensive and currency tailwinds are still there," said Magesh Kumar, equity strategist at Barclays. This year's largest bids so far were all announced this week, with Advent offering 3.7 billion pounds for scientific instruments maker Spectris and Qualcomm's 1.8 billion pound bid for Alphawave, and some advisers expect many more to come. Erik O'Connor, partner at Clifford Chance, said that while economic uncertainties could weigh on the M&A market, factors such as more predictable outlook for interest rates and UK companies' improved balance sheets should encourage dealmaking. "There's a sense that key fundamentals are in the right place to transact," O'Connor said, pointing to technology and real estate, the busiest sectors so far this year according to Dealogic, as those less susceptible to recent market volatility. "I would not be surprised if we continue at a similar pace," he said. ($1 = 0.7383 pounds) Sign in to access your portfolio
Arabian Post
11-06-2025
- Business
- Arabian Post
Middle East M&A Set to Wobble Amid Tariff‑Driven Volatility
Mergers and acquisitions across the Middle East are poised to slow as escalating global trade tensions erupted following the Trump administration's imposition of reciprocal tariffs on 2 April. A sweeping 20 percent tariff on EU goods, 10 percent on UK imports and 25 percent on automobiles rattled markets and shook corporate confidence, triggering what dealmakers describe as a 'major escalation' in international trade friction. A recent global survey conducted by Norton Rose Fulbright and Mergermarket, canvassing 200 senior M&A decision‑makers, indicates that 55 percent of respondents anticipate a dip in deal-making throughout the region, while a mere 11 percent foresee an uptick in activity. These figures mark a stark turn from January, when Middle East M&A outlook was bullish, buoyed by sovereign wealth funds and private equity activity following a robust 2024. The tariff announcement disrupted what had been steady global deal valuations. Data from Dealogic showed global M&A value plummeting to US $243 billion in April, marking a 54 percent drop on the previous month and the lowest total since US deal signings hit multi-decade lows in May 2009. The toll on investment banking fees has been equally significant, falling around 10 percent in the first quarter as volatile market conditions weighed on corporate balance sheets. Wall Street bankers acknowledge a cautious stance among clients. Goldman Sachs described increased dialogue but notable deal backlogs, while Morgan Stanley's Ted Pick characterised the period as a 'pause' rather than a full‑blown slump. JPMorgan echoed the sentiment, with CFO Jeremy Barnum describing a 'wait‑and‑see' environment arising from tariff‑induced uncertainty. ADVERTISEMENT Within the Middle East, M&A flare-up in 2024 rested on government-led diversification drives, notably under Saudi Vision 2030 and the UAE Centennial Plan 2071, with sovereign and government‑related investment institutions heavily involved. Private equity also sustained momentum by increasingly deploying capital into outbound and domestic transactions, particularly in technology, healthcare and consumer sectors. However, the tariff escalation has now weighed heavily on deal-making appetite. More than two‑thirds of global respondents indicated that the trade spat had dampened appetite for deals, with Middle East executives echoing this concern. Access to debt is also under pressure: 35 percent anticipate greater difficulty securing M&A financing, and private credit is expected to fill the emerging liquidity gap, notably in the Middle East and Southeast Asia. Despite headwinds, deal professionals are recalibrating rather than retreating. Almost two‑thirds of respondents anticipate rising use of representations and warranties insurance during 2025, with almost half in the Middle East expecting significant adoption, potentially smoothing future transaction risk. Meanwhile, over half have moved to acquire AI businesses to strengthen due diligence and sourcing capabilities. Deal structure and thematic shifts are also emerging. Energy and healthcare sectors in the region are increasingly seen as ripe for reverse‑ESG warranties, a mechanism allowing sellers to assure buyers on non‑financial risks. Firms are also gravitating towards domestic strategic targets, following patterns seen in other emerging markets, though Middle Eastern SWFs continue to pursue sizable outbound investments. The political geography further complicates the outlook. Positioned between growing US‑China rivalry, the Middle East risks exposure to geopolitical ripples. Deals tied to global value chains may be reconsidered as investors reassess jurisdictional risk. Meanwhile, the region's regulatory frameworks such as UAE free zones remain attractive for inbound private enterprise and joint ventures. Despite these headwinds, there is cautious optimism for a rebound in the latter half of the year. Financial institutions are beefing up private-credit infrastructure, deal insurance is gaining traction, and emerging technologies like AI continue garnering strategic interest. Should global trade tensions ease, Middle East M&A could reclaim its 2024 growth trajectory, reaffirming its status as a cornerstone of global deal-making.
Reuters
29-05-2025
- Business
- Reuters
Mining giant puts new spin on China resource push
HONG KONG, May 27 (Reuters Breakingviews) - Zijin Mining's ( opens new tab, plan to take advantage of the surging gold price may not glitter as much as it hopes. The $67 billion company, which also digs up copper, zinc and lithium, wants to spin off, opens new tab its overseas gold mines into a separate listing on Hong Kong's stock exchange. That could boost its valuation and its global ambition. But new targets may be harder to find. Zijin has gained over 700% since 2015, making it one of the best-performing blue chips in Hong Kong. During that time it also spent $7 billion snapping up assets around the globe, more than its domestic rivals, per Dealogic. Shareholder value was not the only – or possibly even chief – driver. The People's Republic is resource-hungry, and Zijin's overseas spending spree helps Beijing's strategy to secure self-reliance in critical minerals. That's why the mining sector has been unaffected by regulators' tight oversight that has curtailed most other industries' outbound M&A. As a result, Zijin's gold and copper production now accounts for 24% and 65% of China's total, per its latest annual report. The company's strategic value to the country looks even higher with the price of both metals recently shooting to record highs. Arguably, though, keeping them under the same roof has weighed down valuation. Zijin's Hong Kong-listed shares trade at 10 times 2025 earnings, compared with the average 16 times multiple of several gold-mining global peers, calculates Jefferies. Carving out its yellow metal assets might narrow that gap. Yet Chinese miners' global push is getting more rocky. First, Zijin has tended to focus on riskier-looking assets, mainly in developing countries. In 2020, for example, it bought control of the Buriticá project in Colombia from Newmont (NEM.N), opens new tab. It's now the company's third-biggest gold mine by production, but the company reckons thieves in 2023 stole 3.2 tonnes worth $200 million – 38% of the location's annual output. Second, multinational rivals are less willing to sell as Chinese demands drive up prices of critical metals. Many will also want to avoid provoking President Donald Trump, whose administration is stepping up to counterbalance, opens new tab China's influence in resources-rich countries such as the Democratic Republic of Congo, where Zijin is also heavily invested. All big mining companies have to learn how to navigate geopolitical risks. For Zijin, those lessons are getting trickier.
Yahoo
22-05-2025
- Business
- Yahoo
Goldman Sachs combines three Asia IB businesses, names Drayton new unit head
By Selena Li HONG KONG (Reuters) -Goldman Sachs is merging three Asian investment banking businesses it previously managed separately into a single unit to integrate its regional deals advisory and capital market capabilities, according to a memo reviewed by Reuters. Iain Drayton, head of the Wall Street bank's investment banking business in Asia excluding Japan, will lead the integrated Asia Pacific investment banking unit, said the internal memo issued on Thursday. A bank spokesperson confirmed the memo's content. "This structure will enable more holistic client engagement, more effective deployment of global and regional expertise, and increased career opportunities for our people," Goldman Sachs said in the memo. In the new role, Drayton will work closely with Yoshihiko Yano and Shogo Matsuzawa, co-heads of investment banking in Japan, and Nick Sims and Zac Fletcher, co-heads of corporate advisory in Australia and New Zealand, the memo said. A Goldman Sachs veteran, Drayton joined the firm in Tokyo as a managing director in 2006, relocated to Hong Kong in 2010, and was named a partner in 2014. Goldman Sachs ranks at the top of the Asia Pacific equity capital market league table this year, according to Dealogic data.
