City traders are an inventive breed and not given to twiddling their thumbs, even on a quiet day in the middle of an English summer. Takeover gossip passes the time and generates business, but real merger and acquisition (M&A) activity is on the rise and well-run British industrial engineers are in the shop window.
Despite some potentially horrific macro issues, corporate activity could provide useful support for UK equities over the remainder of this year and into 2012. Foreign buyers, armed with balance sheets swollen by fundraisings and a recovery in stock market valuations, are desperate to boost market share, generate cost savings and compensate for subdued organic growth. With sterling at a five-month low against the dollar, American firms have the firepower to do it and these shores have been a happy hunting ground in the past.
Electrical components maker
Analysts from Killik Capital and Brewin Dolphin have drawn up hit lists. While
The Charter bid has put a temporary floor under prices in the engineering sector and raised doubts about a predicted correction. Of course, identifying the next target is tricky, but there’s a good chance the sector will see more consolidation activity.