Foreign predators have scooped up two cutting-edge UK-listed firms.
The deals announced yesterday are another blow to the battered prestige of the London Stock Exchange.
Chip designer Alphawave revealed that it had agreed to a £1.8billion takeover by America software giant Qualcomm.
And scientific instruments maker Spectris said it was ‘minded to recommend’ a £3.7billion approach by US private equity firm Advent.
Each firm is being snapped up at nearly twice its market capitalisation – the latest evidence that the bombed out London market is leaving its listed firms severely undervalued.
Charles Hall, head of research at broker Peel Hunt, said it showed an ‘urgent rethink’ is needed.
Raided: UK Chip designer Alphawave has agreed to a £1.8bn takeover by Qualcomm, while scientific instruments maker Spectris has been targeted by US private equity firm Advent
The deals mark the latest setback to the City’s ambitions to attract promising growth firms and see them flourish as UK public companies.
Instead, firms are stampeding for the exits as they are taken over or choose to cross the pond themselves in search of higher valuations.
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Yesterday’s announcements threatened to overshadow efforts by ministers to showcase Britain’s attractiveness to cutting edge companies, at the start of London Tech Week – with a starring role at the event for Jensen Huang, the boss of chip giant Nvidia.
Darius McDermott, managing director at research group FundCalibre, said: ‘It’s a telling contrast – the Prime Minister courts Jensen Huang just as another UK tech success story, Alphawave, is set to be acquired by an American buyer.’
Coming just days after fintech firm Wise said it would switch its listing from London to New York, it was ‘another sign of UK public markets’ fragility’, McDermott added.
The deal also follows the departures to Wall Street in recent months of betting giant Flutter, building materials firm CRH and JetBlack equipment hire group Ashtead.
Speaking at the start of London Tech Weak, Founders Forum boss Carolyn Dawson said the Wise move should be a ‘resounding wake-up call’ for the City.
Peel Hunt’s Hall said there had been 30 bids for major UK companies so far this year at a total value of £25billion, with Spectris and Alphawave the largest.
At the same time, there had been just one UK initial public offering at a valuation of more than £100million.
‘Companies in the UK seem to be far more attractive to acquirers than investors,’ Hall said last night.
‘The root cause is the consistent outflow of capital from domestic markets.
‘If we want UK equity market to thrive, an urgent rethink is required to ensure that UK capital backs UK companies.’
And noting the big premiums of 85 per cent and 96 per cent offered by the buyers of Spectris and Alphawave, Hall added: ‘The scale of premiums show how undervalued the UK market is.’
Canada-based Alphawave designs chips for data centres, facilities that physically store data, for example for cloud computing. Alphawave listed in London in 2021 in what was then a coup for the City alongside a series of other UK listings, including Wise.
For buyer Qualcomm, the takeover helps it diversify away from smartphone chips – a market it dominates but where phone makers such as Apple are increasingly opting for in-house processors.
Meanwhile, UK-based Spectris disclosed yesterday that it had received several earlier approaches from Advent, which must make a formal offer by July 7 or walk away, under UK takeover rules.
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