Sainsbury’s, Marks & Spencer, Dixons Carphone and Halfords could all be targeted for takeovers by private equity firms this year amid a wave of “pandemic plundering”.
More than 200 companies listed on the UK stock exchange are likely to be targeted for buyouts by private equity giants analysts at financial services firm Canaccord Genuity have warned.
According to the 60-page analysis, reported by This is Money, the coronavirus pandemic has depressed the market value of hundreds of financially healthy British companies providing “low hanging fruit” for private equity investors to grab a bargain.
This phenomenon has already seen £23.3 billion spent by private equity firms to buy 113 British companies this year, including supermarket giants Asda and Morrisons.
This marked the highest rate of deal making since 2007 and shows no signs of slowing down in the second half of the year as average UK valuations still come below their EU and US counterparts.
“Depressed UK asset prices are now attracting offers, mainly from cash-rich private equity ‘barons’ riding into town,” the report read.
READ MORE: Sainsbury’s says it has “no updates” as speculation grows it could be next takeover target
“It is unprecedented and shows the true extent of the UK plc undervaluation relative to global peers in our view.
“We believe UK plc valuations continue to be very attractive so we don’t expect the current trend to abate.”
Canaccord goes on to list 65 companies it sees as undervalued and most likely to receive takeover bids, including Sainsbury’s, Marks & Spencer, Halfords, Dixons Carphone, Kingfisher, ITV, Bloomsbury Vodaphone and Persimmon.
Speculation is already rife that Sainsbury’s could be next to consider a takeover as two of its major rivals, Morrisons and Asda, were bought out.
Morrisons, which was recently purchases by private equity firm Fortress for £6.3 billion, has been called on by business secretary Kwasi Kwarteng to discuss the deal amid fears Britain’s business crown jewels are being sold too cheaply.