City bosses are becoming increasingly wary of the threat of foreign takeovers as UK stocks trade at their largest discount in years, a survey has found.
A vast majority of FTSE 350 bosses and investors surveyed by Deutsche Numis responded by laying out their concerns, the investment bank revealed on Friday.
Almost nine-tenths of these said they believed UK firms were vulnerable to takeovers this year, with 61% adding they believed buyers would mainly come from overseas.
This is as British stocks trade at their largest discount since the beginning of 2022, Deutsche Numis said.
Merger and acquisition activity had been muted last year on the back of wider global macroeconomic woes, however, Deutsche Numis UK merger and acquisitions co-head Stuart Ord noted trends looked to be reversing as conditions improved.
“Despite the protracted macroeconomic uncertainties and increased geopolitical concerns of 2023, there was a promising increase in UK deal activity in the last few months of the year as confidence grew in the outlooks for inflation and interest rates,” he said.
“UK public limited companies feel vulnerable to takeover and there is an expectation that international corporates will be leading the charge,” co-head Oliver Ives added.
“The UK takeover regime is a well-trodden path for international corporates, especially those from the US, who are often able to benefit from one or more of favourable exchange rates, valuation arbitrage and scale.”
Some 88% of the 200 FTSE 350 board members and 200 institutional investors surveyed also highlighted optimism for the merger and acquisition market this year, with many adding UK firms were expected to pen larger deals themselves.