The London stock market's recent shrinkage has sparked widespread concern, but a closer examination of takeover activity reveals that foreign or private equity buyers are not solely responsible for this trend. Instead, analysis suggests that the issue lies in the number of new companies choosing to list on the UK market.
Data from Henrik Persson's research shows that while high-profile acquisitions grab headlines, the natural cycle of businesses floating, raising capital, expanding, and eventually being acquired is at play here. A healthy stock market should not focus solely on preventing departures but rather attract quality companies to replace those exiting. The true test of a market's health lies in its ability to replenish listings.
Recent takeover activity among UK-listed companies provides context. As of 2026, there have been 16 firm offers for UK-listed companies. Projecting this annually suggests approximately 42 firm offers for the full year, lower than the 60 recorded in 2023, 58 in 2024, and 63 in 2025.
The value of these offers is also worth noting. A significant portion – 12 out of 16 this year – are for companies valued below GBP250 million, representing 75 per cent of the total, which contrasts with a long-run average of 57 per cent for smaller companies. Notably, only three firm offers this year have exceeded GBP1 billion, down from 17 in 2024 and 11 in 2025.
However, 'possible' offer situations – those where a deal has not yet been completed but is being pursued – are more active than usual, with 28 recorded so far this year. This could annualise to around 74, higher than any full year in the dataset and may be contributing to concerns about heightened takeover activity.
Interestingly, management teams often believe their companies are undervalued by the market, driving years of preparedness for potential approaches. While acknowledging valuation discounts, boards do not actively seek an exit, suggesting that the issue is more nuanced than initially thought.
Source: Henrik Persson