Don’t resist the foreign invasion
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The “swarm” of foreign invaders is thickening, said Edmund Conway in the Daily Mail. There were 161 acquisitions in the UK by foreign companies in the first three quarters, worth £33bn – already the highest annual number since the dotcom boom.
This week saw bids for firms worth another £23bn added to the tally. Moreover, “the cradle of British capitalism”, the London Stock Exchange (LSE), is also being eyed up. But should we be worried?
The traffic isn’t all one way, said Ian Lyall in the Daily Mail. UK firms have spent £19bn on foreign companies over the past nine months, and over the past few years have been able to grab household names such as America’s Adams, the chewing-gum maker, which fell to Cadbury in 2003.
More importantly, however, there is nothing to fear from the foreign invasion. The car industry has done well under foreign ownership, while the City of London has bolstered its market share despite the takeover of many of its biggest banks by foreign owners, while potential rivals have fallen behind. “As with Wimbledon, the absence of top-ranked British players has failed to halt its growth or weaken its allure,” said the FT. Takeovers release capital as the money shareholders gain is recycled, fuelling economic growth.
Europeans tend to protect their key industries, which undermines overall competitiveness. One need only compare the recent performances of the UK and European economies “to see which is the better model”, said Simon Nixon on Breakingviews.com.
A takeover of the LSE is starting to look less likely. The Competition Commission has ruled that Paris-based Euronext would have to sell its stake in London’s clearing house LCH after a purchase, while the LSE has been on a roll of late, with Chinese and Russian firms choosing to list in London rather than New York. Chief executive Clara Furse may now seek a price of more than £7 a share, which is likely to make Euronext shareholders feel “distinctly queasy”, said Patience Wheatcroft in The Times.
The LSE doesn’t need a deal anyway, said Jeremy Warner in The Independent. It’s clear that European equity trading will drift towards London. As Europe’s most important exchange, it is “supremely well placed” to flourish alone.
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