British Companies That Are No Longer British


LONDON -- The last 10 years have seen dozens of leading U.K. firms fall into the hands of overseas buyers. In many cases, shareholders have profited handsomely from the sale.

Earlier this week, the world-famous Hamleys toy store was sold to French retailer Groupe Ludendo. This is the latest chapter in a series of foreign takeovers of premium British firms.

Born in the U.K.
In 2010, iconic British confectionery firm Cadbury was sold to U.S. titan Kraft Foods. The controversial 840 pence per share offer bought Cadbury's brands into the same stable as Oreo and Philadelphia. While there was some disquiet from staff and fund managers, most shareholders must have been happy or the deal would not have gone through.

One deal that was met with wailing and whinging several orders of magnitude higher was the 2005 takeover of Manchester United. At the time, shares in the club were listed on the London Stock Exchange. The significance of this seemed lost on the club's supporters, however. Hundreds of them demonstrated against the takeover, using the slogan "United Not For Sale." Football fans rarely demonstrate the same zeal for purchasing shares in the club as they do following the team. Perhaps if they had, United fans could have made a takeover impracticable.

Another big-money sale that spawned outbreaks of British defeatism was the 2011 takeover of Autonomy. Autonomy was a provider of data management software. At the time, it was one of the few world-class British software businesses. On the other side of the pond, Hewlett-Packard was suffering from increased global competition in the PC market. The opportunity to move quickly into software by acquisition proved too tempting for Hewlett-Packard. Autonomy succumbed to an $11bn bid from the U.S. giants. This was a whopping 79% premium to the share price prior to the approach.

In May this year, another British software company fell into the arms of a North American acquirer. This time the target was Logica, in a deal valuing the company at 1.7 billion pounds. Canadian software firm CGI Group was the acquirer. This deal took place at a time of great market turmoil. This had depressed Logica's share price, forcing CGI to offer a 60% premium. Shareholders jumped at the chance to take up CGI's offer, and the deal quickly went through with little fuss. With many other companies trading at low prices at the time, the takeover was an excellent opportunity to realize cash and invest elsewhere.

It has been a long time since luxury car marques Jaguar and Land Rover were British-owned. Jaguar was bought by Ford in 1990. Land Rover was bought by BMW (OTC: BAMXF.PK) in 1994, before being sold to Ford in 2000. Ford then sold Jaguar and Land Rover in one transaction in 2008 to Indian firm Tata Motors. Jaguar still trails German manufacturers such as Mercedes, BMW, and Audi in the luxury saloon market.

Meanwhile, Land Rover has made hay in the sports utility vehicle boom. It is often suggested that British staff pay with their jobs when a foreign owner moves in. However, the success of the new Range Rover Evoque has heralded a boom. Over 1,000 new jobs were created on Merseyside as production was ramped up, demanding a 24-hour shift pattern.

Who's next?
A London-listed company can receive a takeover approach from out of the blue. However, there are some companies where an approach from foreign investors would not be such a surprise.

J Sainsbury (ISE: SBRY.L) is currently 25.999% owned by Qatar Investment Authority. A full takeover has frequently been rumored but never materialized. A holding of that size means the Qataris have "negative control" of Sainsbury's. While their stake is too small to force them to bid, it is sufficiently large to prevent another organization from buying the supermarket outright.

Luxury handbag manufacturer Mulberry (ISE: MUL.L) has been one of the AIM market's biggest successes. The share register is dominated by two overseas holders: one is the investment vehicle of a wealthy Singaporean couple (owning 56.3% of Mulberry), and another 24.5% is owned by Luxembourg-based Banque Havilland.

Another British company with some iconic assets is Songbird Estates (ISE: SBD.L) . Songbird owns real-estate assets in Canary Wharf, including the centerpiece Canary Wharf tower. 68% of the shares in the company is owned by three overseas institutions. This means that only a small number of people would need to change their attitude to their investment in the company for ownership to change fast...

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David does not own shares in any of the above companies.

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