The Times - UK (2020-11-14)

the times | Saturday November 14 2020 2GM 59

Business

whether or not to call in the deal for

closer scrutiny. It expects that only a

few transactions will be blocked or will

require measures to make them palat-

able.

However, failure to report a deal in a

mandatory industry will result in pun-

ishments including fines on directors of

as much as £10 million and up to five

years in prison. The government will

also have the power to retrospectively

intervene in deals as long as five years

after they have been completed.

Some hope that Brexit, with the

government’s ambition of attracting

foreign investment from beyond

Europe, will mean that ministers do not

adopt too aggressive an approach. “My

suspicion is that the government will be

careful not to be too interventionist,”

the investment banker said.

Chance to

pick up

a bargain

A

surge in

takeover

activity that

has resulted in

£22 billion of

bids for listed British

companies since August

will accelerate further

once Brexit has passed

and Covid-19 worries

fade, a leading

stockbroking firm has

predicted (Ben Martin

writes).

The onset of the

pandemic led to a lull in

mergers and acquisitions

this year as companies

and private equity firms

took stock of the

economic damage from

the coronavirus.

Yet there has been a

sharp pick-up in bids

since the summer as

buyers seek to cash in

on the cheap company

valuations caused by fears

related to the pandemic.

In a note advising

investors to “buy now

while stocks last”,

analysts at Peel Hunt said

that the surge in activity

was “a classic indicator of

an undervalued market”.

They counted 14

announced deals or

possible bids worth

£22 billion since August

for London-listed

companies including

RSA, Britain’s oldest

insurer, William Hill, the

bookmaker, and

Codemasters, the

computer game

developer. “The future

nature of the UK-EU

trading relationship

should be clearer in the

next couple of months,”

the Peel Hunt analysts

said. “That should allow

UK sectors and

companies to be assessed

more on their merits.”

The Brexit transition

period finishes at the end

of the year, perhaps with

a trade deal.

The breakthrough by

Pfizer ands Biontech on a

Covid-19 vaccine this

week also should result in

more deals, the analysts

predicted.

expected, with very strong grocery and

online sales compensating for the tem-

porary closures of our bars”.

The accounts, which were signed off

before a second lockdown for England

was announced, record that the com-

look as costs increase

pany had enough liquidity to endure a

“second pandemic wave that would

impact the group” into 2021.

The accounts also show that Brew-

dog secured a £25 million loan under

the government’s coronavirus large

business interruption loan scheme,

which provides financial support for

companies hit by the pandemic.

The accounts will raise fresh ques-

tions about the £1.85 billion valuation

the company priced itself at in a recent

crowdfunding round, which is far more

than comparable businesses.

Brewdog, which has more than

130,000 small investors via its “equity

punks” crowdfundings, said that it had

made and donated more than 500,000

units of hand sanitiser to the NHS,

charities and key workers.

Brewdog, Britain’s largest craft brewer,

spent heavily on expansion last year

US suspends its threat to ban TikTok

The Trump administration has granted

Bytedance a 15-day extension of an

order directing it to sell TikTok, the

video-sharing app, the Chinese com-

pany said in a court filing yesterday. It

now has until November 27 to reach an

agreement.

In September the US commerce

department said that TikTok effectively

would be banned in the United States

from November 12 unless its operations

there were sold to an American

company. It said that the Chinese gov-

ernment had “demonstrated the means

and motives” to use TikTok to “threaten

the national security, foreign policy and

the economy of the US”.

However, the commerce department

has now said that it will not enforce the

ban.

TikTok’s short video-sharing app has

more than 100 million users in Britain

and America. Bytedance, a media and

technology group, and its American

and Chinese investors have tried and

failed for months to structure a deal to

provide a US base for TikTok’s

operations that satisfies Washington

and Beijing.

Last month a judge in the US

suggested that the commerce depart-

ment’s proposed ban might exceed its

powers. The department appealed

against the ruling last night, but has

suspended its ban “pending further

legal developments”.

The department claims that TikTok

collects “vast swathes of data” from

users, including network activity,

location data and browsing and search

histories. It alleges that the app is an

“active participant in China’s civil-

military fusion and is subject to manda-

tory co-operation with the intelligence

services of the Chinese Communist

Party”.

Bytedance has vehemently denied

that it passes data to Beijing and says

that it would refuse to do so if asked.

Under a deal proposed by Bytedance,

Oracle and Walmart would take a stake

in TikTok amounting to about 20 per

cent of its global business. This, with

stakes in Bytedance held by American

investors, would put the Chinese com-

pany in US hands. However, Beijing has

made clear that Bytedance and TikTok

should remain Chinese companies.

James Dean US Business Editor

takeovers stuns City dealmakers

Sainsbury’s

Bank could

prove tasty

acquisition

Lenders including Natwest, Lloyds and

Metro Bank are interested in buying

Sainsbury’s Bank from its supermarket

parent.

An acquisition of the bank, which has

two million customers, could form part

of a jigsaw of potential deals that would

make a decisive impact on Britain’s

banking landscape.

Sainbury’s Bank was set up in 1997

with Lloyds and offers personal loans,

insurance and credit cards. The retail

chain bought Lloyds’ 50 per cent stake

in 2013 for £260 million.

This year Sainsbury’s pulled out of a

deal to sell its £1.9 billion mortgage

book to Nationwide Building Society in

the wake of the Covid-19 pandemic, but

now the whole business could be sold in

one piece.

For buyers, there may be a chance to

swallow a lender that has been well run

and has distribution through the

nation’s second biggest supermarket

chain after Tesco. It would give some

purchasers, particularly Natwest, an

opportunity to use some of the billions

of capital that regulators are not allow-

ing them to pay out in dividends.

Simon Roberts, who became chief

executive of Sainsbury’s in June, said

last week: “We have received some

expressions of interest in the bank —

that happens from time to time, but it is

very early stages and there is no

certainty anything will come of it.”

John Cronin, a banking analyst at

Goodbody, expects more deals among

banks. “Larger players are likely to be

stimulated to do sensible deals where

they can to help to address the signifi-

cant revenue challenge,” he said.

Among the possible targets are the

Co-operative Bank, TSB, which is

owned by Sabadell, of Spain, and Virgin

Money. Sainsbury’s Bank could be

attractive to Natwest, Lloyds or Virgin

Money, but might make most sense for

Metro Bank, Mr Cronin said.

Other deals could involve banks buy-

ing businesses to move into new areas.

Goldman Sachs, the investment bank,

has held talks recently with Ascot

Lloyd, an independent financial advice

chain, about a possible takeover,

according to New Model Adviser.

Katherine Griffiths, Ashley Armstrong

government has banned Huawei, the Chinese telecoms group, from the 5G network, but moves to limit China’s investment in Britain may have wider consequences

TIMES PHOTOGRAPHER RICHARD POHLE