Legal & General soars as takeover talk grips the City… after US rival bids £2.7bn for
Takeover fever gripped the City yesterday as Legal & General was touted as a bid target, while offers worth close to £4billion were tabled for other London-listed companies, including Tate & Lyle.
Shares in L&G – which dates back to 1836 and is Britain’s largest insurance firm and asset manager, with more than £1 trillion of savings on its books – rose 6 per cent to value it at close to £15billion.
The rally followed reports suggesting the FTSE 100 stalwart was a takeover target as overseas predators scour the London stock market for bargains.
As speculation over the future of L&G set tongues wagging, a £2.7billion bid for Tate & Lyle was tabled by US rival Ingredion, sending shares in the historic British company soaring 43 per cent.
And Spire Healthcare, the UK’s biggest private hospital operator, jumped 47 per cent after its second-largest shareholder Toscafund launched a £1billion offer.
It marked another day of frenzied merger and acquisition (M&A) activity in the Square Mile after testing and certification group Intertek paved the way this week for a £10.6billion takeover by Swedish private equity firm EQT.
Shares in L&G rose 6% to value it at close to £15bn after the London-listed insurance giant was touted as a potential bid target
Intertek looks set to become the third FTSE 100 firm to be snapped up by foreign buyers so far this year after two-century-old City institution Schroders backed a £9.9billion takeover by US rival Nuveen and a Lloyd’s of London underwriter agreed to be bought by Zurich Insurance for £8.1billion.
Richard Hunter, head of markets at Interactive Investor, said: ‘The potential for further M&A activity remains high, particularly if global markets settle and the likes of the US switch back to acquisition mode, as had been predicted for this year prior to the outbreak of the Iran conflict.’
L&G boss Antonio Simoes insisted it was not for sale, declaring: ‘There’s no discussions or anything else going on.’
But the surge in the share price following the report in the Financial Times suggested investors are not ruling out the emergence of an overseas predator, in a move that would fuel fears that undervalued British firms are being snapped up on the cheap.
Charles Hall, head of research at City broker Peel Hunt, said: ‘If L&G were to go, it would be just another sign of the UK being underpriced. We are the hunted rather than the hunter.’
Dan Coatsworth, head of markets at AJ Bell, said a takeover of L&G would be ‘disappointing’ for pensions as the shares are ‘incredibly popular with income seekers thanks to their generous dividends’.
He added: ‘It would also weigh on the reputation of the UK stock market which continues to struggle to replenish a pot shrunk by takeovers with new market listings.’
Tate & Lyle, once a global leader in sugar before switching towards sweeteners and ingredients, said it was ‘in discussions’ with New York-listed Ingredion about a deal following ‘a number of approaches’.
The bid values the 165-year-old company at 615p a share and follows a 60 per cent slump in its value over the past five years.
Spire Healthcare, meanwhile, said it was ‘minded’ to back an offer worth 250p a share from Toscafund, set up in 2000 by tycoon Martin Hughes, known as ‘the Rottweiler’ for his aggressive approach to dealmaking.