Britain Wary of Foreign Takeovers By U.S. Companies

British officials are taking a closer look at potential foreign takeovers, making it tougher for American companies to follow a longstanding route to international expansion through deep-pocketed acquisitions, The Wall Street Journal reported Sunday (Dec. 12).

In the spotlight are Nvidia Corp.’s $40 billion takeover of chip designer Arm Holdings and Parker-Hannifin Corp.’s acquisition of defense contractor Meggitt PLC. In January, British companies in 17 sectors, ranging from artificial intelligence to energy, must notify government leaders about foreign takeovers or large investments as part of the National Security and Investment Act.

“What we are seeing is increased sensitivity in the area of national security, no doubt about it,” said Douglas Lahnborg, a London-based antitrust lawyer at Orrick Herrington & Sutcliffe LLP.

U.K. leaders sees their increased oversight as part of an effort to protect companies that are developing technology focused on guarding national security and combating public health threats such as the COVID-19 pandemic. Germany, Italy and Spain are among other countries that have added stronger protections against foreign takeovers.

U.S. companies have spent twice as much on U.K.-based companies this year as they have on any other country, with Israel the second-highest, and five times more any other European country, led by Germany.

In 2020, U.S. companies spent $137 billion on British companies, its highest level since Dealogic bean tracking these numbers in 1995. This year, U.S. companies have forked out about $100 million, the second-most ever.

Related: Britain Eyes Revised Listing Rules for London Stock Exchange

Earlier this month, Britain’s stock markets overseer debuted new listing regulations that would allow a company’s founder to keep an initial degree of control while providing for a form of dual class share structures in premium listings for five years. The changes will affect the London Stock Exchange and Aquis.

The move to modify the U.K.’s listing rules comes at a time when more European businesses are listing in the U.S.

New York IPOs raised about $9.5 billion through August, the highest total for the first eight months of the year in more than 20 years, according to PYMNTS’ research.

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