'Merger Monday' nets £26 billion for UK Plc

'Merger Monday' nets £26 billion for UK Plc

	Published : Mon, 07 Nov 2005 01:35 By : Paula Demarzio Print this Story

LONDON - The weekend is a fine time to contemplate what exactly happened on Monday last. Four companies announced foreign takeover bids and the London Stock Exchange itself could be a bid target in the coming days after the Competition Commission gave a conditional clearance last week.

The market went on an overdrive after mobile giant O2 announced that it had agreed a £17.7 billion takeover bid by Spanish telecoms giant Telefonica. O2 shares jumped 24 percent to 203.5 pence as investors hoped that Germany's Deutsche Telekom might better Telefonica's 200 pence-a-share offer.

That did not happen, but the O2 shares remained high throughout the week. Then came the bid for P&O’s international ports network. It is being reported that the potential bidder is from Dubai Ports World. Pilkington is being pursued by Japan's Nippon Sheet Glass and finally Mowlem, the construction contractor also announcing a foreign bid.

Analysts say this is a dangerous time for the investors since their low-cost sterling shares are now heading out of the country. The problem could become acute if the LSE does get taken over. But the FTSE 100 index jumped in line with the bids and this more than made up for the 5 percent dip last month.

James Ridgewell of New Star Asset Management says that the UK Plc has unique assets and hence is being wooed by companies who want to make their presence felt on a global scale, "If you have unique assets - like, for example, the London Stock Exchange [which could also be the subject of foreign bids following last week's Competition Commission clearance] - they are very hard to replicate. So they are more likely to be bid candidates," he said.

Other analysts feel that the surge in bids indicates that the movers and shakers have the confidence in the market, "If industrial groups are buying in the same industry [as themselves] it suggests they have confidence in economic growth. None of these was speculative; they all had good, rational business cases. That is a positive case for the stock market," said David Jane, head of equity investment at M&G.