2018 saw the return of big ticket deal-making by US corporates in the UK, with a record number of British companies being snapped up by their American counterparts over the year.
The $87bn (£66.4bn) surge of inbound M&A from the US highlights corporate America's growing appetite for business in the UK, despite the geopolitical uncertainty that looms in the run-up to 29 March 2019, the day on which the UK is scheduled to leave the European Union.
American corporates were expected to curb their overseas spending following the Trump administration tax reforms (which sought the repatriation of cash from overseas that could otherwise have been used for cross-border M&A). But this has been proven incorrect, with the number of US acquisitions now up over $57bn on last year.
Highlights include Comcast's $30bn takeover of Sky, the $4.96bn sale of NEX Group to US futures exchange CME, and the acquisition of Shazam by Apple in September. All of which begs the question: why?
A natural target
There are a number of factors at play, but one thing on which most analysts agree is that the devaluation of sterling over the past four years has made UK businesses an attractive target for US buyers.
The falling pound (especially as compared with a strengthening euro), coupled with the lower multiples at which UK share prices tend to be valued compared with US stocks, gives rise to a perceived undervaluation of UK companies currently on the market.
Throw in healthy corporate earnings and the availability of cheap debt in the US (which has now reached a record $6.3tn) and it is clear why the UK has become a natural target market for American companies pursuing growth overseas. But what does this mean for shareholders?
The opportunity to exit investments at strong multiples makes takeovers by American corporates hugely appealing to shareholders.
The recent offer for JLT by Marsh & McLennan for £4.3bn is a good example - shareholders will receive £19.15 per share when the deal goes through in 2019 - a 38% premium on the average share price between July and September 2018.
Sky shareholders will also enjoy windfall gains following their approval of Comcast's bid for the company, which valued the group at £30.6bn ($40.3bn) - an increase of more than 100% on Sky's share price of about £7.50 before Fox made its initial offer in December 2016.