‘Takeover frenzy’ if pound goes

The pound’s early entry into the European single currency would result in a spate of takeovers in the engineering sector, according to a senior City figure. ‘If EMU goes ahead and the pound joins fairly swiftly, it might just tilt an investor towards Britain,’ said Richard Hughes, head of UK equities at M&G Investment Management. […]

The pound’s early entry into the European single currency would result in a spate of takeovers in the engineering sector, according to a senior City figure.

‘If EMU goes ahead and the pound joins fairly swiftly, it might just tilt an investor towards Britain,’ said Richard Hughes, head of UK equities at M&G Investment Management.

‘These companies have been undervalued by the stock market, and you can take them over more easily.’

This tack, combined with flexible labour markets and amenable takeover rules make Britain an attractive haven for North American and Far Eastern investors who want to get into Europe.

‘We’ve already seen this happening, with Whessoe, Newman Tonks and LucasVarity,’ said Hughes.

Entry into EMU would make British firms even more attractive by building immunity to extreme currency swings suffered recently by exporters.

But vacillation over entry would be enough to steer foreign companies towards more supportive countries such as France, Germany and Italy, despite the less favourable market conditions.

The British Government has recently been reported to favour early entry to EMU. A statement to clarify the position is expected when Parliament returns.