The UK-listed technology space faces being left threadbare as low valuations leave leading ‘made in Britain’ companies at the mercy of opportunistic overseas buyouts.

Enterprise software company Micro Focus (MCRO) last week (26 Aug) agreed to be taken over by Canada’s Open Text (OTEX:NASDAQ) in a $6 billion cash deal, seeing the Micro Focus share price double. The Ontario-based company is offering 532p per Micro Focus share, a 99% premium to the previous day’s closing price.

After five years of share price declines following the disastrous merger with HP Enterprises in 2017, Micro Focus shareholders can be forgiven for snapping Open Text’s hand off. The company’s share price had lost 90% of its value before the Open Text offer was announced.

This is the latest in a lengthening list of UK technology companies being targeted by overseas buyers. Two days earlier saw speculation confirmed that engineering software firm Aveva (AVV), the UK’s largest listed tech company by market capitalisation, could be swallowed by its 59% majority owner, Schneider Electric (SU:EPA) of France, sparking the stock to rally nearly 27%.

Cyber security Darktrace (DARK), which uses artificial intelligence to help clients protect themselves from cyber criminals and hackers, has also attracted takeover offers. Its shares jumped almost 25% in the wake of confirmation that private equity firm Thoma Bravo is thinking about launching a takeover.

Rumours persist that rival offers could come from rival private equity or industry peers, pushing the Darktrace share price beyond 500p and suggesting that international investors saw the company as significantly undervalued.

Consumer cybersecurity company Avast (AVST) is closing in on its own multi-billion pound takeover, from the US’s NortonLifeLock (NLOK:NASDAQ). If these deals close, it would mean the UK stock market losing four of its six largest software companies, representing nearly £5.5 billion of revenues combined.

Healthcare tech firm Emis (EMIS), worth around £1.2 billion, is also in negotiations after receiving an offer from UnitedHealth (UNH:NYSE) of the US.

The UK tech stock exodus comes despite the Government’s claims that it would unleash London’s equity markets to attract big tech companies. Some investors are still reeling from the short-sightedness that saw Cambridge’s microchip designs champion Arm Holdings sold off to foreign owners in 2016, when Japan’s Softbank paid $32 billion to deny investors the chance of compounded growth returns from the shares.

Fortunately for UK investors, accessing global tech stocks for long-term wealth creation has never been easier, with multiple fund and investment trusts options also available to retail investors.

‹ Previous2022-09-01Next ›