MNCs on shopping trip love British cos

LONDON: Britain’s steel industry is taking a passage to India. For the UK’s top companies, it’s been a one-way ticket. Tata Steel’s £4.3bn ($8bn) takeover of Corus Group, formerly British Steel, leads $88-bn of takeovers of British companies by foreign buyers this year.

Sold to the public by Margaret Thatcher’s government in 1988, Corus follows Peninsular & Oriental Steam Navigation, Britain’s top ports operator, and 363 other UK companies into foreign ownership this year.

The UK is the most popular shopping ground in Europe for buyers outside the region, as France and Italy fend off predators with a mix of takeover regulations and labour rules. The value of takeovers by foreign buyers in the UK is more than double the combined total for Spain, France and Germany.

“The current government doesn’t seem to object to overseas buyers and the unions are certainly less influential than they are on the continent,” said Rupert Cecil, who helps oversee $13.4bn as head of UK equities at London-based Kleinwort Benson, a unit of Germany’s Allianz.

Thames Water, which supplies 13m people in the southeast, changed hands from German to Australian ownership this month as Macquarie Bank agreed to buy the company from RWE, Germany’s second-biggest utility, for £4.8bn. Arcapita Bank BSC, the Bahrain-based buyout firm, agreed to buy Viridian Group, the power utility serving Northern Ireland, for £1.62bn on October 6. Qatar may seek another water utility after its bid for Thames was trumped.

British companies are relatively cheaper than European counterparts: the UK’s benchmark FTSE 100 Index trades at about 12.7 times the forecast earnings of its members, while Germany’s DAX Index trades at almost 14 times, according to Bloomberg data.

“There are a lot of good value companies in the UK and there are fewer regulatory issues,” said Jane Strawbridge, who helps oversee $1bn at Exeter, England-based Christows. Grupo Ferrovial, Spain’s second-largest construction company, bought BAA, the world’s largest airport operator, for £10.1bn in August.

The bid for Corus is Ratan Tata’s biggest move yet outside India and comes 60 years after India gained independence from British rule. Tata Steel was set up by the founder after being refused help in the 1890s by the then viceroy, the British ruler of the country.

In February, the government of Dubai agreed to buy P&O for £3.88bn after a three-month battle against a Singapore state-owned company. Later that month, Japan’s Nippon Sheet Glass agreed to buy Pilkington for £1.8bn to become the world’s largest supplier of glass used in buildings and cars.