Fund managers are finding it difficult to justify recent share prices of one-of-a-kind UK assets such as the London Stock Exchange and Associated British Ports, and opinion is divided on their true worth.
Companies such as ports operator ABP, stock market operator LSE and airports group BAA, which all command unique or strategic positions in their markets, have been targeted by offshore predators in recent months.
The LSE's share price has doubled since the start of this year after a take-over offer and stake-building by US rival Nasdaq and after the New York Stock Exchange said it was in talks about a strategic acquisition.
Last month ABP rejected an indicative take-over offer worth 2.2 billion pounds ($3.9 billion), or 730 pence a share, from a Goldman Sachs-led consortium. ABP's shares, now over 700p, started the year below 600p.
Some fund managers say that on traditional measures, which often use companies' cash-flows or earnings, the valuations of some of these assets are stretched and difficult to justify.
"It's on a wing and a prayer," Colin Morton, who manages 370 million pounds of assets at Rensburg Sheppards Investment Management, told Reuters.
"It's very difficult (to value them) ... Some of these ports companies' actual valuations on a cash-flow basis look more than stretched. People have seen what's going on globally and are desperately hanging on to try and get as much as they can out of a potential buyer."
Morton said he had recently reduced his stakes in ABP Ports and BAA to around 0.6 percent each of his portfolios.
"I've reduced ABP Ports substantially. I was very happy to own it at 450 to 500p. But at 703p it looks very stretched."
Other fund managers are also finding it hard to apply traditional valuation measures to stocks prized so highly by bidders.
"When it's about strategic valuations, it's beyond our valuation measures," said Alastair Mundy, who manages the 890 million pound Investec Cautious Managed fund.
"We felt we could value it up to around 8.50 to 9.0 pounds (per share). After that, we recognised it had gone into reasons of being a strategic or trophy asset," said Nick Train, manager of the 158 million-pound Finsbury Growth & Income trust.
"At 950p (the level of Nasdaq's take-over offer, which was withdrawn on March 30), it wasn't a million miles from where we valued it as a stand-alone business. At 1250p, I don't know."
Train, who has been a shareholder in LSE for about four years and holds 1.8 million shares across his portfolios, said the exchange's almost unique position made it particularly valuable.
"These are very, very rare assets, these exchanges, particularly an exchange with the depth and global reach of the LSE. It's always been clear that if there was a take-over it needed to be at a very high price."
'STRATEGIC' VALUATIONS:
While the stock market has valued many of these firms as standalone businesses, some fund managers say the assets could be worth more to a potential acquirer than to the market.
In these deals, buyers may increase borrowing to higher levels than the market would be comfortable with or merge assets to create much larger and more highly prized businesses.
"The way I see it, someone sitting on the management board of Nasdaq, New York Stock Exchange or possibly Euronext would probably have a clearer view of what it's worth," said Train.
He said that while a merger of European exchanges could be justified by cost savings, a take-over by a US exchange would have different drivers.