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New UK foreign investment controls may restrict PE deals

Overview

As part of UK Prime Minister Theresa May’s new industrial strategy, private equity deal teams should expect a more interventionist approach to the acquisition of strategically important UK businesses by foreign buyers.

The UK government has signaled its intention of creating a “proper industrial strategy”, making it capable of stepping in when British companies receive foreign takeover bids, and has announced a revamp of the current public interest regime to guarantee government review of foreign ownership and control of “critical infrastructure” projects. Exactly what that framework might look like is to be confirmed and determining which businesses are strategically important to the UK will be challenging.

Recent commentary has focused on nuclear and energy projects, but previous public concern over a range of other businesses (such as food, technology and pharmaceuticals) means that wider sectors could be affected.

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