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Takeover interest in UK companies stepped up on Thursday, as Macquarie made a fresh offer for waste management group Renewi, marking the third approach for a London-listed group in less than 24 hours.
Macquarie announced a possible £701mn offer for Renewi, after its previous attempt to buy the company was rejected last year. The move came hours after Abu Dhabi-backed Fortress Investment Group announced it was buying pub and restaurant chain Loungers for an enterprise value of about £351mn.
On Wednesday night, Direct Line also said it had rejected a £3.3bn takeover offer from larger rival Aviva.
Dan Coatsworth, investment analyst at AJ Bell, said takeover activity was “red hot on the UK market”, with action being recorded at the middle and lower ends of the market cap spectrum.
“So many UK-listed companies are being taken over because the market didn’t spot the value on offer,” he added.
Shares in Direct Line, Loungers and Renewi all jumped after the approaches were revealed, with Renewi shares surging by 45 per cent to 803p by early afternoon on Thursday.
Renewi and Macquarie said they had reached a “preliminary agreement” on the Australian asset manager’s possible offer of 870p per share. The bid represents a 57 per cent premium to Wednesday’s closing price.
Takeover interest in UK-listed companies has been rising steadily this year, as beaten up share prices have helped to lure investors and drive bidding wars and buyouts.
Thirty London-listed companies received firm takeover offers for an average value of £1bn in the first half of this year, according to data from investment bank Peel Hunt, compared with 27 offers with an average value of £443mn in the first half of last year.
Meanwhile data provider Dealogic found that the value of offers for London-listed companies hit the highest level since 2018 earlier this year. Recent targets have included FTSE 100 company Rightmove, with Rupert Murdoch-owned group REA calling off its pursuit in September.
Loungers shares also surged by over 30 per cent on Thursday after it agreed a takeover by Fortress, which is majority-owned by Abu Dhabi’s Mubadala investment arm.
The US-based group, which has about $48bn in assets under management, said it would pay 310p per share for Loungers, at a 30 per cent premium to Wednesday’s closing price.
The move is the latest foray into the UK consumer sector for Fortress, which also owns Majestic Wine, Punch Pubs and Poundstretcher. Domnall Tait, managing director at Fortress, said Loungers had delivered “impressive” growth in recent years “in spite of the recent challenges faced by the wider hospitality sector”.
Meanwhile, Direct Line shares rose to a eight-month high after the insurer rejected a £3.3bn offer from its larger rival, calling it “highly opportunistic” and saying it “substantially” undervalued the business. The company’s stock surged by 41 per cent, to about 224p.
Coatsworth said: “Direct Line’s board has rejected Aviva’s approach yet its shareholders might welcome a bid, particularly if the takeout price helps to make up for the big losses from the past two years or so.”
