Foreign trophy hunters scent bargains in Britain as pound weakens

* HKEX's offer for LSE latest in rush of inbound UK M&A

* Foreign firms taking advantage of weakened pound

* Analysts expect more M&A before Brexit deadline

* 532 inbound deals in 2018, 2-1/2 times more than 2017

By Josephine Mason, Thyagaraju Adinarayan and Olga Cotaga

LONDON, Sept 11 (Reuters) - From pubs to theme parks,
sterling's near record lows against other major currencies has
encouraged overseas buyers to snap up "UK Plc", with more
bargain hunters expected.

Private equity and foreign investors, including Hong Kong's
richest man, have swooped on pub operators, brewers and some of
Britain's most popular tourist attractions, as the pound
has slipped. .

Hong Kong Exchanges and Clearing's $39 billion
approach for the London Stock Exchange on Wednesday is
the latest in a flurry of dealmaking, although acquirers have
mainly targeted small- and mid-cap companies that make most of
their revenue in sectors that have been hammered by Brexit.

Last month, Hong Kong's richest man agreed to buy pubs
operator Greene King; private equity firm Blackstone
led a consortium to scoop up Madame Tussauds and Legoland
owner Merlin; Ei Group was acquired by
PE-backed Stonegate Pub Co in July and Japanese brewer Asahi
Group bought Fuller, Smith & Turner in
January.

And in July, U.S. private equity firm Advent International
agreed to pay 4 billion pounds ($5 billion) to buy Cobham
, the British defence and aerospace group known for its
pioneering air-to-air refuelling technology.

Sterling's fall has been driven by worries about the
potential damage to the world's fifth largest economy if Britain
leaves the European Union without a deal at the end of October.

If Britain does indeed leave the EU without a deal, it may
tarnish the country's longer-term business activity and
corporate appeal.

But some analysts reckon the pace of acquisition attempts
could quicken ahead of the Oct. 31 Brexit deadline.

"We think there could now be a rush for other UK-listed
companies in the coming weeks - old favourites like ITV and
Imperial Brands are among those to watch," said Neil Wilson,
chief market analyst at Markets.com.

"There are plenty more besides," he added.

The pound has shed about 7.5% of its value against the U.S.
dollar since the original Brexit deadline in March and plunged
anew at the start of September close to levels not seen since
1985. It has recovered slightly over the past week as parliament
acted to stymie a chaotic Halloween Brexit.

British government data shows foreign M&A activity in the UK
has perked up in recent years, with 218 deals struck in the
first half of 2019 worth a total of 23.4 billion pounds ($28.9
billion) showing the pace holding steady despite Brexit fears.

Office of National Statistics (ONS) data shows there were
532 acquisitions of UK companies by foreign buyers in 2018 worth
62 billion pounds, 2-1/2 times the 2017 total and more than
three times 2016 levels.

The Hong Kong exchange's move on the LSE, which if completed
would be the largest takeover of a UK company by a foreign firm
so far this year, and recent dealmaking suggest investors may
now be willing to take bets on a UK recovery even as the turmoil
around Brexit deepens.

The recent weakness of sterling "undoubtedly would be one of
the reasons" behind the Hong Kong exchange move, Jane Foley,
senior currency strategist at Rabobank, said.

($1 = 0.8109 pounds)

(Reporting by Josephine Mason, Thyagaraju Adinarayan and Olga
Cotaga; Editing by Alexander Smith)