Vectura Group plc deal suggests plenty private equity takeover pipeline remains

The agreed purchase of Vectura Group PLC (LON:VEC) nudged up the total spent by private equity groups on UK firms by another £1bn, with plenty more still expected where that came from.

Carlyle Group’s deal for the FTSE 250-listed group today takes the total spent in private equity-backed mergers & acquisitions (M&A) since the start of last year up to £37bn, based on data from Dealogic shared with the Daily Mail.

The number of deals is now 124, if Vectura is added to the Dealogic calculations.

It comes a week after private equity giant KKR swooped to buy infrastructure firm John Laing for £2bn.

Since the start of the year, remote power provider Aggreko agreed to be taken private for £2.3bn (though this may prove problematic), Signature Aviation for £3.5bn by a consortium including private equity interests, and security group G4S has been snapped up by a private equity-owned rival for £3.8bn.

Asda’s near-£7bn takeover was completed in February, with a consortium including the Issa brothers and private equity group TDR Capital.

Despite the ongoing recovery in the FTSE 100 and FTSE 250, the continuing stream of bid suggests people are still seeing plenty of value in UK companies, with valuations still seemingly depressed by the pandemic and lingering Brexit concerns. 

With an estimated US$1.6 trillion backlog of dry powder still burning a hole across the private equity industry’s pockets, there is no reason why many more UK firms will not continue to be snapped up.

Next in line could be share registrar Equiniti PLC (LON:EQN), which is currently mulling a purported sixth bid from PE group Siris, and St. Modwen Properties PLC (LON:SMP), where the board said it would be amenable to a deal after receiving an approach about a potential £1.2bn deal from Blackstone.

Private equity firm Cinven or a rival may be a return for Sanne Group PLC (LON:SNN) after the provider of asset management services two weeks ago rejected a takeover offer that valued the company at £1.3bn.

There could also be action at J Sainsbury PLC (LON:SBRY), with takeover speculation swirling as a mysterious continental billionaire has upped his stake, and at ITV PLC (LON:ITV), where interest in the shares has distinctly cooled yet the content wars between the likes of Netflix, Disney and Amazon are getting ever hotter.

Other potential targets might include other companies with reliable cash flows and undemanding valuations.

Superyacht services group GYG PLC (LON:GYG), meanwhile, is still awaiting a decision from Harwood Capital, which earlier said it was evaluating a possible takeover offer.

The average premium to the share price for bids for UK listed companies over the six months to early May is around 36%, according to research by AJ Bell across successful, ongoing and even failed approaches.

“The number of bids, and the premium, suggests that someone, somewhere – be they trade or financial buyers – feel UK companies are still going cheap, with overseas buyers potentially attracted by how the pound still stands below the levels reached just ahead of the Brexit vote five years ago,” AJ Bell analysts said.

Six months of bids (private equity, trade sales and others)

Date – Company – Suitor/buyer

26-May Vectura Carlyle Group

26-May Spire Healthcare Ramsay Health Care

17-May Immunodiagnostic Systems PerkinElmer

14-May Sanne Group Cinven 

07-May St Modwen Blackstone

06-May John Laing KKR

06-May Bacanora Lithium Gangfeng

19-Apr EquinitiSiris Capital

09-Apr GYG Harwood Group

24-Mar Gamesys Bally’s

23-Mar Tavistock Investments TEAM

18-Mar Trans-Siberian Gold Horvik

05-Mar Aggreko TDR, I Squared

08-Mar ADES International Innovative Energy, Saudi PIF and Zamil

26-Feb RDI REIT Starwood Advisers

08-Feb Nucleus Financial James Hay

08-Feb Arrow Global TDR Capital 

05-Feb Aggreko TDR Capital / Isquared Capital

05-Feb French Connection Go Global +

01-Feb Innovaderma Creightons (2-for-3) 

27-Jan Scapa…