The UK government is to sell the 500-year-old Royal Mail. Veteran dealmaker James Leigh-Pemberton is to take on the helm of UK Financial Investments with its holding in Lloyds in his sights.
Will the sale of Royal Mail come with a “Busby” or “Tell Sid” campaign familiar to those who lived through the BT and British Gas privatisations of 1984 and 1986 respectively? Both events took place during a well-entrenched equity bull market.
The Royal Mail sale comes four years into a bull market which began in early 2009 and has made progress ever since, notwithstanding repetitive summer-time blues. The MSCI World Index has delivered a total return of +16% per annum in sterling terms in the period from March 2009 to August 2013.
We have postulated that the stop-start nature of recovery since 2008 has held animal spirits in the corporate world at bay. Certainly, data from Mergermarket shows that while the equity markets have regained their highs, the value of M&A remains depressed in comparison.
This summer has been marked by an absence of crisis news-flow and a continuation of a strong bull-market in equities. We have also witnessed the announcement of the sale of Vodafone’s stake in Verizon Wireless to Verizon Communications for US$130bn. This is a deal that for a long time has been placed in the “too difficult” box. It is also a deal which results in Verizon making a record-setting US$49bn bond issue to fund the purchase. While Vodafone will return cash to shareholders, it also intends to go on an acquisition spree in Europe in addition to the current purchase of Kabel Deutschland.
Closer to home, construction firm Kier Group has bought May Gurney – the guardian of much of our motorway network. Meanwhile a small Midlands industrial property investor with a 23 year record of dividend increases has made a couple of purchases after 4 years of inactivity.
The first signs of mega-deals and anecdotal activity of rising corporate activity suggests that multi-strategy managers should be revising prospects for Event Driven managers.