American opportunists venture deals on two prominent British tech figures in a buying spree
Modern Vultures Circle: Two Top UK-Listed Firms Swallowed by Foreign Giants
This latest blow to the London Stock Exchange involves two high-tech UK companies succumbing to American predators. The deals unveiled yesterday add insult to injury, further tarnishing the stature of the London Stock Exchange.
First up, chip designer Alphawave has agreed to a £1.8 billion takeover by software colossus Qualcomm. Meanwhile, scientific instruments manufacturer Spectris has received a £3.7 billion proposition from US private equity firm Advent. Each target is being snatched up at nearly double its market capitalisation, which underscores the UK market's stunning undervaluation.
Charles Hall, head honcho at broker Peel Hunt, comments, "It demands an urgent rethink." These acquisitions highlight the City's diminishing aspirations to nurture promising growth companies and see them flourish as public UK firms. Instead, companies are desperate to escape, lured by lucrative offers or enticed across the Atlantic in pursuit of higher valuations.
Raiding the Treasury: UK Chip designer Alphawave meeting its doom at the hands of Qualcomm, and Spectris being targeted by Advent
Ranking high on the agenda during London Tech Week, the government aimed to showcase Britain's allure to visionary firms. With Jensen Huang, chip giant Nvidia's chief executive, shining center stage, this aim took a significant hit as UK tech jewel Alphawave appeared poised for acquisition.
The latest developments in this saga transpired just after fintech firm Wise declared its intention to list in New York instead. It serves as another sign of the UK's market fragility, echoed by Darius McDermott, managing director at research group FundCalibre. The exodus of major UK companies to the United States includes recent departures such as betting giant Flutter, building materials firm CRH, and equipment hire group Ashtead.
During London Tech Week's inauguration, Founders Forum's Carolyn Dawson warned the Wise move should serve as a "resounding wake-up call" for the City.
Peel Hunt's Charles Hall revealed the extent of the situation, stating there had been 30 bids for major UK companies this year, amassing a staggering total value of £25 billion. The Spectris and Alphawave acquisitions mark the largest of these deals. Simultaneously, UK initial public offerings (IPOs) remain sparse, with a grand total of one exceeding £100 million in value since 2021.
"Companies in the UK appear to be far more attractive to acquirers than investors," Hall conveys. "If we want our equity market to thrive, an urgent rethink is required to ensure that UK capital reinforces UK companies."
In the face of such premiums—Spectris and Alphawave were offered respective premiums of 85% and 96%—Hall concludes, "[This] illustrates the immense undervaluation of the UK market."
Alphawave, headquartered in Canada, specializes in designing chips for data centers—the physical hubs where data is stored, such as cloud computing. Its London debut in 2021 represented a major victory for the City, alongside other UK listings like Wise. For Qualcomm, the takeover offers an opportunity to diversify its smartphone chip dominance, an area where phone manufacturers, such as Apple, are increasingly opting for in-house processors.
On the other hand, UK-based Spectris revealed yesterday that it had received multiple earlier offers from Advent, which is now mandated by UK takeover rules to make a formal offer by July 7 or abandon its pursuit.
The acquisition of UK-based chip designer Alphawave by Qualcomm and Scientific instruments manufacturer Spectris by Advent, despite the high premiums offered, underscores the attractiveness of UK companies to acquirers rather than investors in the finance world. This scenario raises concerns about the future of business and technology within the UK, potentially impacting its status in both the domestic and global markets.
The striking undervaluation of the UK market, as evidenced by deals like these during London Tech Week, might hinder the growth of promising businesses and the successful flourishing of public UK firms, consequently altering the business and finance landscape within the country.
