Apr 25, 2018

Sky, Whitbread and Shire deals test government’s taste for M&A

A new US bid for broadcaster Sky, an American activist securing a break-up of Costa Coffee owner Whitbread, and an agreed Japanese deal for drugmaker Shire pose a broader question about changing national tastes: does the UK government still have the stomach for cross-border mergers and acquisitions? On Alphaville, the Financial Times blog, the rhetorical question raised on Wednesday was: "When was the last time we had two FTSE 100 bids on the same day?" On Whitehall it was more probably: "What did we say the last time we had a FTSE 100 bid, let alone two plus a demerger involving overseas companies?" Because the political treatment of M&A under the current administration has been anything but logical or consistent. Comcast's Sky bid poses as many industrial concerns as Fox's, and arguably more than Melrose's bid for GKN. Sky employs 30,000 mainly in the UK and is a significant investor in Britain's creative industries - but no clearance is required for overseas ownership. While overseas bidders for divisions of GKN did not concern the government, the pension funding of the 259-year old British company did. Government intervention in the Melrose-GKN takeover did set one precedent: a requirement for bidders to provide binding undertakings on investment in UK skills and technologies.

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