This March 2023 issue of In The Know, a newsletter by Baker McKenzie's London office, discusses the trend of UK public companies being acquired and taken private (UK P2Ps) in a challenging market. The favorable US dollar to GB pound exchange rate and flat valuations in certain sectors have driven this trend. Debt financing for these acquisitions has been challenging due to higher cost of capital and cautious underwriters. However, some UK P2Ps have been debt financed in recent months using various approaches. Overseas corporates, particularly those based in North America, have been able to access US dollar denominated financing from their relationship banks, creating a currency mismatch for the acquisition of UK companies in sterling. This is overcome using hedging or by having an excess of US dollar commitments.
