UK M&A wave accelerates as foreign buyers exploit cheap valuations
A surge in foreign takeovers of UK listed companies highlights a deep valuation discount that threatens to hollow out the London stock market.
A flurry of takeover agreements has underscored the accelerating sell-off of British corporate assets. Last week, engineering group Rotork accepted a £4.1 billion offer from Swiss-Swedish firm ABB, while outsourced services provider Mitie agreed to a £3.1 billion buyout by rival OCS Group. The same day saw photonics firm Gooch & Housego and pawnbroker Ramsdens succumb to £346 million and £200 million bids from US buyers, respectively.
These transactions are part of a broader exodus. According to Peel Hunt’s head of research Charles Hall, 154 bids for UK companies valued above £100 million have been launched or completed since early 2023, with a cumulative value of £165 billion. The momentum has intensified this year, with FTSE 100 constituents Beazley, Schroders and Intertek all agreeing to takeovers, and DCC and Segro currently in the crosshairs.
The M&A wave is compounded by companies abandoning UK markets entirely. Seven large businesses, including CRH and Wise, have relocated their primary listings since 2023, removing roughly £120 billion of market capitalization. A further eight UK-based companies, most notably Arm Holdings, opted to list overseas, depriving the domestic exchange of an additional £330 billion in value.
Valuations remain the primary draw for acquirers. Peel Hunt chief executive Steven Fine noted that the recent batch of targets accepted offers pitched at premiums of 41% to 73%. "That tells you just how undervalued many U.K. companies have become," Fine said. Hall attributes the trend to a mix of depressed share prices, the UK's open takeover regime, and domestic fund managers selling stakes to meet redemptions or boost short-term performance.
For institutional investors, the dynamic presents a dilemma. While takeover premiums offer immediate returns, the steady attrition of listed companies erodes the depth and attractiveness of the UK equity market. As boards and shareholders become increasingly international, the traditional reluctance to sell to foreign buyers has evaporated, leaving London’s status as a global financial centre under sustained pressure.
