Key facts
- The average takeover premium for UK companies has reached 45% this year.
- Foreign buyers, predominantly US firms, are behind 86% of the total deal value.
- Since 2023, 154 bids for UK companies exceeding £100m have been made, removing £165bn in market capitalization.
- Only 11 companies above £100m have listed in London since 2023, adding £6bn in capitalization.
- Companies like Beazley, Schroders, Rotork, and Easyjet have been acquired at significant premiums.
London's stock market is experiencing a significant wave of takeovers, with foreign buyers, particularly from the US, acquiring UK companies at substantial premiums. This trend is attributed to buyers exploiting a valuation gap between the UK and global markets, leading to a 'slow leak' of capital from the UK equity market.
According to AJ Bell, the average premium offered in the 22 deals with public terms has reached 45%. Foreign buyers account for 86% of the total deal value, with US buyers making up half of all overseas approaches. Notable acquisitions include Zurich's £8.1bn takeover of Beazley at a 59.8% premium, Nuveen's £9.9bn acquisition of Schroders at a 34% premium, and ABB's £4.1bn purchase of Rotork at a 73% premium. The mid-market is also affected, with Apollo making an £5.7bn bid for Easyjet at an 81% premium.
Since 2023, Peel Hunt reports that 154 bids for UK companies valued over £100m have erased £165bn in market capitalization. In contrast, only 11 companies exceeding £100m have listed in London during the same period, adding just £6bn in capitalization. Fund managers suggest that buyers are capitalizing on depressed valuations.
Michael Field, chief European equity analyst at Morningstar, noted that the activity is strategic, with larger companies acquiring undervalued targets to reduce their own cost bases. He anticipates this trend will continue unless significant changes occur in the UK.
Dan Coatsworth, head of markets at AJ Bell, expressed concern that the ongoing takeover trend reduces choice for investors. Steven Fine, CEO of Peel Hunt, called on the government to intervene, arguing that the disappearance of companies from the market weakens the UK's tax base and growth prospects by reducing revenues from associated professional services and diverting pension savings overseas.