City exhibits robustness, bolstering Peel Hunt; broker experiences 'a solid commencement' in the recently inaugurated fiscal year
The UK takeover market is experiencing a significant surge, putting it on track to be the busiest year since 2021. In the first half of 2025 alone, £74 billion worth of bids have been tabled for British companies, highlighting an unprecedented level of activity.
This surge is driven by several key factors. Both UK-based consolidators and overseas private equity firms, particularly from the United States, are fueling this surge. US firms account for over a quarter of bidders, with private equity firms involved in 14% of all bids, while UK acquirers represent 63%, well above their five-year average of 46%.
Takeover contests have reached their highest level in five years, signaling a more aggressive and competitive environment for mergers and acquisitions. The deals include both strategic acquisitions and public-to-private transactions, with undervalued UK assets attracting multiple suitors.
Contrary to expectations that private equity would dominate, trade buyers—companies operating in the same or related sectors as their targets—have been more active and successful in 2025. Nearly half of takeover attempts involved trade buyers, who often take a longer-term view and are willing to pay fair prices.
The rise in takeovers reflects growing confidence among UK corporates and investors. Michael Nicholson of Peel Hunt, an investment bank, attributes this to UK-listed consolidators competing effectively against US private equity by focusing on scale, liquidity, and preserving high-quality UK assets.
The shift in sentiment has benefited sales to European equity funds, helping to stem outflows from UK funds. European funds recorded inflows of £435m. However, London has been rocked by defections to other bourses, with reports suggesting AstraZeneca, the UK's largest listed company, could move its listing to New York.
The lack of new listings through initial public offerings (IPOs) means that companies like AstraZeneca are not being replaced, sparking fears of decline. Peel Hunt, an outspoken critic of this trend, has been vocal in raising concerns over an exodus of firms from the London stock exchange.
Despite the macroeconomic background being currently hard to predict, Peel Hunt has enjoyed a strong start to its new financial year. The company's revenues for the three months to the end of June are comfortably ahead of the same period last year, leading to a 5.4% lift in Peel Hunt's shares to 98p.
In May, investors withdrew £662m from US-focused equity funds, marking the first withdrawal in six months. However, this trend seems to be reversing, with UK equity outflows falling to £354m, the lowest in nearly four years.
In conclusion, the UK takeover market in 2025 is experiencing a significant surge, driven by domestic consolidation, overseas private equity, strategic deals, and active participation from both private equity and trade buyers. This surge reflects growing confidence among UK corporates and investors, despite concerns about the lack of new listings and the potential exodus of firms from the London stock exchange.
- The surge in takeovers in the UK market is primarily driven by UK-based consolidators and overseas private equity firms, with US firms accounting for over a quarter of bidders and private equity firms involved in 14% of all bids.
- The stock market is witnessing an increase in activity due to the high level of competing bids for undervalued UK assets, with both strategic acquisitions and public-to-private transactions taking place.
- Despite the concerns about the lack of new listings and potential exodus of firms from the London stock exchange, investors, including UK-based private equity and trade buyers, are showing growing confidence by participating actively in mergers and acquisitions.
