Another week brings another offer – this time Ergomed (ERGO). This came at a 28.3 per cent premium to the closing stock price and means another UK company is likely to be taken off the shelves.
Despite many proclaiming the UK stock market is cheap, there appears to be an even greater number who disagree. There has to be, because the market is just the money-weighted sum of the collective opinion of a stock, and if stocks are cheap it can only be because there is more capital on the sidelines than at risk.
What does this mean for the UK? Well, the FTSE Aim All-Share index is down more than 40 per cent from its peak. And since the market euphoria petered out, we’re now seeing two things: a scramble for capital from many companies that are seeing their fortunes turn for the worse, and reluctant investor appetite. That means initial public offerings (IPOs) are rare, whereas we had a new listing almost every week in the boom days of 2021. And it also means decent quality companies are leaving the market with few replacing them – ultimately meaning the quality of companies on the market is deteriorating.