UK is 'predator turned prey'

Foreign investors are taking over British industry at a faster rate than UK firms are buying businesses abroad, according to research published today.

Foreign investors are taking over British industry at a faster rate than UK firms are buying businesses abroad, according to research published today.

The figures show that last year overseas acquisitions of UK firms exceeded the amount spent on foreign companies by British businesses for the first time in four years.

UK firms spent £78bn on takeovers last year but only £26bn of that was used to acquire overseas companies. By contrast, foreign investors spent £35bn buying UK companies.

The Predator Index, compiled by Zephyr and Bureau van Dijk Electronic Publishing, shows that the biggest buyer of UK companies last year was once again the US. American companies acquired 177 UK firms, with a total value of £9.7bn. However, the second largest acquirer, by value, was Spain, with £8.6bn of takeovers, thanks largely to Banco Santander's purchase of Abbey National.

The US was the most popular destination for UK companies seeking to buy foreign assets, with 126 deals costing £5.5bn, but this was a sharp reduction from the £14.7bn worth of takeovers carried out in the US by UK firms in 2003.

Lisa Wright, commercial director of Zephyr, said the decline in UK acquisitions of US companies was surprising given that the flow of investment in the other direction had hardly changed.

UK companies could also have taken advantage of the weak dollar last year to buy US companies on the cheap.