'Foreign vultures' circle UK companies

COLIN McLean, the Edinburgh fund manager who warned about the risks to HBOS a year before its takeover by Lloyds, has warned that foreign vultures are set to swoop on a string of UK industrial firms this year. McLean said the UK industrial sector is ripe for takeover as it has a number of companies which have continued to perform well in the recession but appear relatively cheap to foreign investors due to the devaluation of the pound.

He predicts that Shanks, the FTSE 250 waste industrial firm which recently rebuffed an approach from Carlyle Group, is likely to attract further bids, as would International Power, which has been linked to France's GDF Suez.

But McLean said many industrial firms are likely to find it difficult to rebuff takeover bids this year due to the continued weakness of sterling against most major foreign currencies.

"We are at that stage in the cycle where balance sheets are quite strong and globally the pound is quite low," he said. "We have some British industrial companies with very interesting strategic interests. Some are quite small versus US and European ones."