M& A boost for F&C funds

F&C funds continue to benefit from M& A activity as news of a bidding war surrounding restaurant group La Tasca and the proposed merger of house builders Taylor Woodrow and George Wimpey hit the headlines.

Luke Newman, manager of F&C Special Situations fund and Makis Kaketsis, manager of UK Dynamic fund, invested in La Tasca at the end pf last year and have been building their position in house builder Taylor Woodrow in 2007. Since purchase they have seen the share price of their holdings rise by 30per cent and 15per cent respectively as the companies have become the subject of takeover activity.

Newman said: "M& A activity has been at the forefront of the equity market rally, driven by interest from trade buyers as well as financial buyers such as private equity funds. With the cost of funding still very low and valuations remaining attractive there are no signs of it abating.

"Restaurant groups such as La Tasca have seen their profits rise in line with a rise in the portion of disposable income spent on food, particularly on eating out. We bought La Tasca at 145p last November and with news that Blackstone Group's agreed offer for the Spanish tapas chain has been trumped by Tchenguiz family's R20 vehicle, the share price has sky rocketed to 195p. We also bought Taylor Woodrow ahead of the company's proposed merger with George Wimpey."

Newman said the combined group would create the largest house builder in the UK which should carry with it a number of scale benefits.

"As well as creating procurement and purchasing synergies in the UK, the combined company would achieve critical mass in the US states where they are active. Until now Taylor Woodrow's existing operations in Florida and Texas could have been viewed as subscale," he added.