LONDON -- The British are invading America again, and find it exhilarating.
A stream of aggressive British bids for U.S. companies has turned into a wave in recent weeks. So far this year, British firms have spent $18 billion on acquisitions in the United States, compared with $13 billion for all of 1986.
This month, National Westminster Bank announced the purchase of First Jersey National Bank for $820 million; the Hanson Trust industrial conglomerate announced a takeover of Kidde Inc., a New Jersey-based industrial company; Blue Arrow, Britain's largest employment agency, said it would acquire Manpower Inc., the largest employment agency in the world, for $1.3 billion, and Lloyds Bank said it planned to buy a 25 percent stake in New York investment management firm Weiss Peck and Greer for $67.5 million.
The audacious move by British investors to the United States has been greeted here as an example of the rebirth of the British entrepreneurial spirit.
"There is a new hold-your-head-up confidence stalking the street," said Michael Stallibrass, head of mergers and acquisitions at Shearson Lehman Bros. Inc.'s London office. "There is a new belief in the U.K. and its capabilities, a belief in the competitive spirit enshrined in Thatcherism," a reference to the conservative policies of Britain's prime minister, Margaret Thatcher.
Hanson's acquisition of Kidde means that it now manufactures a product, the Jacuzzi, which most Britons have never heard of.
The London financial community has been surprised as much by the diversity of the transatlantic deals as by their number. Bob Cowell, director of research at the London stockbrokerage firm of Hoare Govett, divides the takeovers into four categories.
The first category includes companies buying out minority interests. This includes British Petroleum's June purchase of the formerly publicly held 45 percent of Standard Oil of Ohio. That deal, worth $7.6 billion, ranks as the largest of all British-American deals.
The second category includes companies already dominant in the British market seeking to expand in similar industries in America. Unilever's $3.1 billion purchase of Chesebrough-Pond's is an example. Already dominant in personal products in Britain, Unilever wanted to boost the strength of its Lever Brothers and Liptons Foods U.S. subsidiaries, and also expand into skin care.
Unilever spokesman Mike Haynes stressed that one of the appeals of the U.S. market was that it was often ahead of Europe on new products in personal care. "The U.S. is a particularly innovative market," he said.
Banking, also in this category, has a small number of players -- Britain's Big Four -- holding a dominant, profitable position with little room, or at least little apparent interest, in fighting for further market share. Britain's booming demand for consumer and mortgage credit has meant that in spite of Third World debt writedowns, most of the British banks have done much better than their big American counterparts.
NatWest's purchase of First Jersey, which cannot take effect until next January, for 2 1/2 times book value -- a price judged high by analysts -- is evidence of NatWest's determination to be in at the start of U.S. regional banking. Standard Chartered Bank, which last year added United Bank of Arizona to its Union Bank of California holding, is pursuing a similar strategy from the other end of the country.
"British banks want to diversify from the U.K.," commented Patrick Frazer, banking analyst at the London brokerage firm of Laing and Cruickshank, "and there are more decent-sized banks in the U.S. than anywhere else. And fewer legal and political restrictions on buying them."
Cowell's third category includes British conglomerates that specialize in making money out of acquisitions. The two best known are Hanson Trust and BTR. Both Hanson and BTR are led by seasoned and strong-willed entrepreneurial figures, Lord Hanson and Sir Owen Green, respectively. Both specialize in buying unglamorous low-tech manufacturing companies, and turning them around through the application of rigorous financial and management methods.
Cowell's fourth category is the most controversial. It includes fast-growing British companies that are striking out abroad, either in industries where they have no experience, or in their own industry but in a country in which they have little experience. He cited Martin Sorrell's takeover of J. Walter Thompson earlier this year and Blue Arrow's proposal for Manpower as examples.
The Blue Arrow effort aroused a lot of debate here, principally because it would be financed with a big stock issue that would more than triple the company's market capitalization. Tony Berry, founder and chairman of Blue Arrow, brought his company to the London Stock Exchange only three years ago.
"These are deals," said Cowell, "which involve a high price, few assets to back up the price and businessmen who have yet to prove themselves internationally.
"Berry is in effect betting his company on the fact that he can achieve the same results with Manpower that he has with Blue Arrow," he added. "It just frightens the heck out of me."
Stallibrass of Shearson Lehman said the buoyancy of the London equity market and innovative ideas in finance have helped upstart British entrepreneurs with American ambitions. "There is a trend among investors here," he said, "to look more and more at the management team and its track record when considering a deal instead of just examining the balance sheet."
The result has been that certain entrepreneurs have been able to put their popularity with London fund managers to use in funding ever bigger acquisitions. Stallibrass cited BTR's Green, ICI's Harvey-Jones (ICI took over US Stauffer Chemicals in July in a $1.7 billion deal), Stanley Kalms at Dixon's electronics store chain and the Saatchi brothers, who rose from a London slum to run the world's largest advertising agency.
Economists here say that the general economic climate is right for a continuation of the acquisition trend. Six consecutive years of economic growth have increased the rate of return on capital of British industry to 20 percent and reduced the debt-equity ratio to a mere 10 percent, according to Hoare Govett figures.
Even the economic worries support the transatlantic strategy: if the London market's concern over a big balance of payments deficit next year proves well-founded, then the likely drop in the pound and the possible petering out of the British consumer boom argue for a strategy of diversifying into America now, while the pound is still at a comfortable level over $1.60.
But the Financial Times took a cautious line in a recent editorial. It pointed out that British firms have been burned in the United States more than once, the most notorious example being Midland Bank's loss of hundreds of millions of dollars in its investment in Crocker Bank