Brexit

USA for sale? British firms target America after Brexit bruises the pound


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Two FTSE-listed companies have recently announced acquisitions in the U.S. and a third is reportedly in talks to do the same.

These acquisitions are taking place despite a weaker pound, which means U.K. firms are currently paying a lot more to gain access to the United States. Analysts believe that the attractiveness of U.S. equities make such acquisitions a clever move in the medium to long term and news of further deals should be expected in the coming months.

"The FTSE All-Share has a number of industry leading global companies. Some of these companies are looking to expand into new markets, or consolidate their position in existing markets. This is particularly pertinent for companies that want to boost their top-line growth," Callum Abbot, U.K. equity and fund manager at JPMorgan Asset Management, told CNBC via email.

"The U.S. equity market is attractive from this perspective as companies are exposed to the growing U.S. and global economies. The U.S. may be particularly attractive if the Trump administration follows through on its campaign policies including easy fiscal policy, corporate tax cuts and simplification of regulation," he added.

So far, since the start of the year, the health goods producer Reckitt Benckiser agreed to buy baby food maker Mead Johnson Nutrition and British American Tobbaco is acquiring Reynolds American. Last week, news reports said that Sports Direct was in talks to acquire the U.S.-based retailer Eastern Outfitters.

None of the companies above were available for comment. British American Tobacco said in an email to CNBC that the reasons for the purchase remain those outlined on January 17, when the deal was announced and did not want to make any further comment.

At the time, the firm mentioned in a press release that the size of the U.S. market as well as a bigger exposure to high growth emerging markets were two of the main factors leading to the acquisition.

"It is widely expected that monetary policy will tighten over the medium term, in fact, globally, bond yields have already started to rise. With this in mind, the window for taking on cheap debt is narrowing and so there is a time incentive to get deals done in the near term," Abbot from JP Morgan told CNBC.

Tom Whelan, Hogan Lovells' global head of private equity, told CNBC over the phone that indeed there is room for further similar deals and "open to all sectors," but there is also interest from U.S. firms in the U.K. market.

According to Whelan, companies decide on acquisitions always based on "strategic reasons". He added that fears over Trump's protectionism and border tax could be among such "strategic reasons". This is because, non-US-based companies could soon face further restrictions when buying a U.S. companies.