Does it hurt the UK economy when the United States buy all our good companies?

LHW99

There are things like the US / European anti-trust / competition laws that would probably take a look (at least) on mergers / take-overs where two mega companies want to become one entity.

SneakySpectator

Top 10 British companies 

AstraZeneca 25 years ago

Linde 145 years ago

Shell 117 years ago

HSBC 159 years ago

Unilever 95 years ago

Rio Tinto 151 years ago

Relx 31 years ago

British American Tobacco 122 years ago

BP 115 years ago

Average age 96 years old, with just 1 tech company (Relx).

Top 10 American companies

Apple 48 years ago

Nvidia 31 years ago

Microsoft 49 years ago

Amazon 30 years ago

Google 26 years ago

Facebook 21 years ago

Tesla 21 years ago

Broadcom 64 years ago

Walmart 62 years ago

Eli Lilly 149 years ago 

Average age 50 years old, with 8 tech companies. Eli Lilly actually skews the average a little, if you replaced it with a company like Oracle, the average age drops to 39.

Yeah I think I'm starting to see a pattern...

DullGreyGuy

wmb194 said:

DullGreyGuy said:

SneakySpectator said:
To be honest I don't know why big US companies don't just buy up all our companies? Well not all of them but

Exxon could buy Shell
Eli Lilly could by AstraZeneca 
Walmart could buy Tesco, Morrisons, Sainsbury's, Asda, M&S and B&Q.
JP Morgan could buy HSBC, LLoyds and Natwest.
Lockheed Martin could buy BAE Systems. 
Verizon could buy BT

When they buy them they are going to have to pay a premium for them else the shareholders will simply not agree to the sale. Once you bought it you have a big cost in integrating it to at least some level. To technically pay more than something is worth and then costs of integration you have to have a good idea as to how to increase its value (or believe its significantly under valued) or have another strategic reason for the purchase. Just saving a bit on deduplicating central functions isnt going to be enough of a saving to make it worth while.

Secondly its not a free for all, Walmart buying the top 4 UK supermarkets would be referred to the Competition and Markets Authority who almost certainly would not allow all of them to be owned by the same firm.

You also seem to be forgetting that Walmart did buy Asda for £6.7bn in 1999 and then sold it for £6.8bn in 2020 after the proposed sale to Sainsbury's for £7.3bn was blocked by the CMA. If you inflation adjust it they paid £10.1bn and sold it for £6.8bn 20 years later. 

I worked for a US company that bought a dud of company* in Britain for £1bn, invested hundreds of millions if not more improving its physical assets and then sold it for pocket change a few years later to a British company... It doesn't always go well. When you've invested in physical assets bolted to the ground you can't easily pop them into an overhead locker and fly them home.

*Those (British) shareholders couldn't believe their luck. Bullish, more money than sense Americans are sometimes what you need.

All depends on the nature of the businesses and what the strategic driver for the purchase was. 

Its not just Americans that can be bullish, there have been plenty of entities elsewhere, including the UK, who've thought themselves experts and being able to turn around anything and been cut down to size

masonic

SneakySpectator said:

masonic said:

SneakySpectator said:

masonic said:

The outgoing investors would also have to agree to any sale and it would need to be at a price they'd be satisfied with.

Whenever have the shareholders not accepted a buyout offer? US companies just offer like 30%+ over share value and the they start drooling and foaming at the mouth and accept the offer.
All of our companies are owned by management funds like Vanguard, Blackrock etc so you as an individual investor have zero say. Vanguard control your shares, Vanguard always votes yes, because why wouldn't they?
Anyway it's not just the delisting of companies from the UK indexes, it's that often times the work force slowly gets funnelled into the US.
Look at DeepMind, an amazing AI company we created that was bought by Google. Yes it's technically headquarter in the UK but looking at the careers page they have 53 jobs currently available, only 9 of which are based in the UK... The other 44 are in the US.
By selling our companies the other countries we gain literally nothing but lose pretty much everything, except a HQ building that probably only has a handful of staff in it anyway.

Shareholders frequently reject buyout offers. Ultimately they should be free to choose whether or not to sell their shares. They've risked their capital in support of getting the company where it is at the time of the offer, and if they decide it is better for them to sell their stake then they should be able to do so. When a government starts forcing the hands of shareholder in some misguided view of the national interest, then that would have dire consequences for investment into the UK. Likewise if the population are forced to invest their money into UK companies against their will, or companies are banned from listing their shares on the open market where they are capable of being purchased by foreign agents.

Well it doesn't really affect my personal finances anyway because I invest in the VWRP fund which is 66% USA and only 3.4% UK so my exposure to this second world economy is minimal anyway. 

However I would still like to see the UK actually create a good company, list it publicly, and hold onto it. 

What would count as the UK holding on to it? Just for it to retain a London Stock Exchange listing? For its shares to be majority owned by UK entities? For it to restrict its activities to the UK market?

If you regard the UK as a second world economy, then your views about what companies should do seems a little hard to understand. Any action they do take would surely harm their future if the UK is as you characterise it.

Since you seem to care about having a voice in the companies in which you invest, using VWRP seems inconsistent with that. Its never been easier to invest directly in company shares. You seem to be of the opinion that companies should not accept attractive takeover offers, but most investors in collective funds would welcome this if the price is right because they just want broad exposure and a good return on their investment.

If this thread is a call to action for others to support up and coming UK companies, then it would be more credible if you were doing your bit.

kempiejon

I have a seen a fair few of my FTSE250 carefully chosen prospects taken over. The annoyance is my research highlights bargains with long term prospects of growth and income and I was ready to hold for decades. To have then taken off me after just a year or months is annoying as I then have to find somewhere new for my money and do the research again and the long term profits don't get to feed into my wealth. Still I'll not go broke being forced to take a profit.

SneakySpectator

masonic said:

SneakySpectator said:

masonic said:

SneakySpectator said:

masonic said:

The outgoing investors would also have to agree to any sale and it would need to be at a price they'd be satisfied with.

Whenever have the shareholders not accepted a buyout offer? US companies just offer like 30%+ over share value and the they start drooling and foaming at the mouth and accept the offer.
All of our companies are owned by management funds like Vanguard, Blackrock etc so you as an individual investor have zero say. Vanguard control your shares, Vanguard always votes yes, because why wouldn't they?
Anyway it's not just the delisting of companies from the UK indexes, it's that often times the work force slowly gets funnelled into the US.
Look at DeepMind, an amazing AI company we created that was bought by Google. Yes it's technically headquarter in the UK but looking at the careers page they have 53 jobs currently available, only 9 of which are based in the UK... The other 44 are in the US.
By selling our companies the other countries we gain literally nothing but lose pretty much everything, except a HQ building that probably only has a handful of staff in it anyway.

Shareholders frequently reject buyout offers. Ultimately they should be free to choose whether or not to sell their shares. They've risked their capital in support of getting the company where it is at the time of the offer, and if they decide it is better for them to sell their stake then they should be able to do so. When a government starts forcing the hands of shareholder in some misguided view of the national interest, then that would have dire consequences for investment into the UK. Likewise if the population are forced to invest their money into UK companies against their will, or companies are banned from listing their shares on the open market where they are capable of being purchased by foreign agents.

Well it doesn't really affect my personal finances anyway because I invest in the VWRP fund which is 66% USA and only 3.4% UK so my exposure to this second world economy is minimal anyway. 

However I would still like to see the UK actually create a good company, list it publicly, and hold onto it. 

What would count as the UK holding on to it? Just for it to retain a London Stock Exchange listing? For its shares to be majority owned by UK entities? For it to restrict its activities to the UK market?

If you regard the UK as a second world economy, then your views about what companies should do seems a little hard to understand. Any action they do take would surely harm their future if the UK is as you characterise it.

Since you seem to care about having a voice in the companies in which you invest, using VWRP seems inconsistent with that. Its never been easier to invest directly in company shares. You seem to be of the opinion that companies should not accept attractive takeover offers, but most investors in collective funds would welcome this if the price is right because they just want broad exposure and a good return on their investment.

If this thread is a call to action for others to support up and coming UK companies, then it would be more credible if you were doing your bit.

Look I'm not claiming to be some kind of patriot but I want to be proud of my country.

I want good affordable housing. I want good job opportunities, I want well funded public services. I want a strong military. I want good education and many more things.

And one of the many more things I want is for us to create world changing industry leading companies that get listed on the LSE and don't get instantly bought out and absorbed into the US economy. Is that such a radical ideal? I don't think so.

Here's what I know to be true. If we're constantly selling all of our good companies to the US then we will never have a strong economy because all the value and jobs those companies create end up funnelled into the US. 

How can we ever expect to create really successful companies if we instantly sell them in their infancy? 

I'm actually willing to bet that by 2050 the top 10 UK companies will still be the ones that are currently top 10, give or take 1 or 2, because the US simply won't allow us to create a world changing market leading company because they'll just buy it before it reaches that stage. 

Linton

SneakySpectator said:

masonic said:

The outgoing investors would also have to agree to any sale and it would need to be at a price they'd be satisfied with.

Whenever have the shareholders not accepted a buyout offer? US companies just offer like 30%+ over share value and the they start drooling and foaming at the mouth and accept the offer.

All of our companies are owned by management funds like Vanguard, Blackrock etc so you as an individual investor have zero say. Vanguard control your shares, Vanguard always votes yes, because why wouldn't they? 

Anyway it's not just the delisting of companies from the UK indexes, it's that often times the work force slowly gets funnelled into the US. 

Look at DeepMind, an amazing AI company we created that was bought by Google. Yes it's technically headquarter in the UK but looking at the careers page they have 53 jobs currently available, only 9 of which are based in the UK... The other 44 are in the US.

By selling our companies the other countries we gain literally nothing but lose pretty much everything, except a HQ building that probably only has a handful of staff in it anyway.

"We" did not create DeepMind.  A small group of technical people created it.  "We" did not sell DeepMind.  The buyout was agreed and the owners of DeepMind chose to sell the company for a large sum of money.  I would guess that they did not want the hassle of running a much larger company than DeepMind was at the time and could not afford to turn what they had developed into a commercial proposition. Chess and Go playing software is great for a demonstration but no-one was going to pay significant amounts of money for it.

The objective of many such small technical companies is to advance their ideas sufficiently to get one of the major players to buy them out. If they fail they go bust.

Tucosalamanca

I'm actually willing to bet that by 2050 the top 10 UK companies will still be the ones that are currently top 10, give or take 1 or 2, because the US simply won't allow us to create a world changing market leading company because they'll just buy it before it reaches that stage. 

What a wild prediction  - the market today is completely different to that of 25yrs ago, as will the market be in 25yrs time.

Since 2000, we've had dot.com bubble and collapse, 9/11, wars in the middle East, GFC in 2008, a decade of  ZIRP, global pandemic, Brexit etc, etc.
In 2000 we had no Google, no Facebook, Apple were an oddball outlier, Arm Holdings were a penny stock, Nokia were giants. Investors weren't interested in AZN back then, it was just a boring blue chip.

The world (even UK) doesn't stand still. You think we won't see similar changes in the future?

I would suggest that you look East, I'm not convinced that US will be the main player forever...

Nebulous2

The UK (people / companies / state) had substantial assets both here and abroad going back to imperial days. That has gradually been whittled away and reduced over the last 100+ years. 

I first took an interest in shares in the 80s and we had substantial overseas holdings. We also had the capacity to dangerously over reach. Look at the history of Midland Bank and their Crocker subsidiary in the US for instance. 

We've been running twin deficits ever since that have made a good fist at draining our resources. 

The government has a voracious appetite for debt and sold all the utility companies and publicly owned infrastructure to raise money. These shares often found their way to UK companies and the general public, but then often ended up in foreign ownership. Then the primary objective becomes how much cash can be squeezed out of them, rather than the quality of service. Look at Thames. 

The public has a voracious appetite for cheap plastic tat, often from China. What does China do with the huge annual surpluses it makes? Buy up foreign government debt and infrastructure - often natural resources mines etc. They control key industries worldwide, such as heavy-metals needed for electronics and batteries. 

Anaemic company results, and lowly ratings here, make our companies soft targets to be bought over, sometimes by smaller companies, however as highlighted by people above these takeovers can be costly mistakes. Think of these as a donation to our country coffee fund. 

I've no idea how we can halt our decline, in many ways it is / was inevitable. We've accelerated it with some serious self-inflicted wounds, such as Brexit. That was supposed to set the City of London free to innovate and make profits, but has created more of a City bypass than a new superhighway. 

A good start would be living within our means, reducing and removing the deficits and gradually trying to claw some money back, instead of continuing to scatter it to the winds. 

masonic

SneakySpectator said:

masonic said:

SneakySpectator said:

masonic said:

SneakySpectator said:

masonic said:

The outgoing investors would also have to agree to any sale and it would need to be at a price they'd be satisfied with.

Whenever have the shareholders not accepted a buyout offer? US companies just offer like 30%+ over share value and the they start drooling and foaming at the mouth and accept the offer.
All of our companies are owned by management funds like Vanguard, Blackrock etc so you as an individual investor have zero say. Vanguard control your shares, Vanguard always votes yes, because why wouldn't they?
Anyway it's not just the delisting of companies from the UK indexes, it's that often times the work force slowly gets funnelled into the US.
Look at DeepMind, an amazing AI company we created that was bought by Google. Yes it's technically headquarter in the UK but looking at the careers page they have 53 jobs currently available, only 9 of which are based in the UK... The other 44 are in the US.
By selling our companies the other countries we gain literally nothing but lose pretty much everything, except a HQ building that probably only has a handful of staff in it anyway.

Shareholders frequently reject buyout offers. Ultimately they should be free to choose whether or not to sell their shares. They've risked their capital in support of getting the company where it is at the time of the offer, and if they decide it is better for them to sell their stake then they should be able to do so. When a government starts forcing the hands of shareholder in some misguided view of the national interest, then that would have dire consequences for investment into the UK. Likewise if the population are forced to invest their money into UK companies against their will, or companies are banned from listing their shares on the open market where they are capable of being purchased by foreign agents.

Well it doesn't really affect my personal finances anyway because I invest in the VWRP fund which is 66% USA and only 3.4% UK so my exposure to this second world economy is minimal anyway. 

However I would still like to see the UK actually create a good company, list it publicly, and hold onto it. 

What would count as the UK holding on to it? Just for it to retain a London Stock Exchange listing? For its shares to be majority owned by UK entities? For it to restrict its activities to the UK market?

If you regard the UK as a second world economy, then your views about what companies should do seems a little hard to understand. Any action they do take would surely harm their future if the UK is as you characterise it.

Since you seem to care about having a voice in the companies in which you invest, using VWRP seems inconsistent with that. Its never been easier to invest directly in company shares. You seem to be of the opinion that companies should not accept attractive takeover offers, but most investors in collective funds would welcome this if the price is right because they just want broad exposure and a good return on their investment.

If this thread is a call to action for others to support up and coming UK companies, then it would be more credible if you were doing your bit.

Look I'm not claiming to be some kind of patriot but I want to be proud of my country.
I want good affordable housing. I want good job opportunities, I want well funded public services. I want a strong military. I want good education and many more things.
And one of the many more things I want is for us to create world changing industry leading companies that get listed on the LSE and don't get instantly bought out and absorbed into the US economy. Is that such a radical ideal? I don't think so.
Here's what I know to be true. If we're constantly selling all of our good companies to the US then we will never have a strong economy because all the value and jobs those companies create end up funnelled into the US. 
How can we ever expect to create really successful companies if we instantly sell them in their infancy? 
I'm actually willing to bet that by 2050 the top 10 UK companies will still be the ones that are currently top 10, give or take 1 or 2, because the US simply won't allow us to create a world changing market leading company because they'll just buy it before it reaches that stage. 

You keep saying that were constantly selling our good companies to the US, but that isn't what's happening. You're also conflating the economy and the stock market, or public services and private enterprise, which makes for a very confused message. The FTSE100 for example, gets the majority of its revenue from overseas, and those activities make little contribution to the UK economy. None of what we've been discussing has a negative impact on house prices, or impacts the provision of healthcare or defence or education.

Companies listed on the NYSE or Nasdaq are not owned by the USA. They are owned by shareholders, just like companies listed on the LSE. You and I can own shares in Apple, or any other listed company. Listing on a US exchange brings a much larger capital and investor pool in which to fish, and the greater competition affords a higher valuation. The US economy is an order of magnitude larger and provides access to many more consumers of goods and services. It has the highest population of billionaires and other wealthy - so go figure that US investors are dominant in stockmarkets. The UK used to have some pull as the gateway to the large continental European market, but this less true now for reasons that must not be mentioned, especially when it comes to services. Beyond the economy, the US does not burden itself with providing public services equivalent to some of those we enjoy in the UK. It is resource rich in terms of both commodities and land.

It is not that "the US simply won't allow us to create a market leading world changing company", it's that such a company is inevitably going to seek out the best opportunities for growth that the world has to offer, and in most cases that means going where the money is. Though there are plenty of fantastic companies around the world that have other attributes beyond a high market capitalisation.