Western assets tipped for takeovers

INVESTMENT strategist Mark Burgess is predicting a new wave of takeovers of western assets by cash-rich companies in the emerging markets

Burgess, chief investment officer at Threadneedle, expects merger and acquisition activity to pick up and for it to be driven by Far East and South American companies wanting to buy brands and expertise.

"We think M&A will pick up. Corporates will behave in a shareholder friendly fashion through buybacks and increasing their dividends," he said in a visit to meet more than 100 fund managers in Edinburgh.

"We also think we will see a significant move by an emerging markets company buying something in the mature markets."

Indian companies have already bought steel, whisky and car companies, including Glasgow-based Whyte & Mackay. There have been some moves into the west by largely state-backed companies such as the Korea National Oil Corporation acquiring Aberdeen-based Dana Petroleum.

Burgess believes Chinese companies in particular will see opportunities for making moves into the west as they seek to capitalise on the country's rapid rate of growth. China is the world's second biggest economy but is perceived as weak in branded products.