London's stock market is witnessing a frenzied takeover activity, with £26.4bn ($34.8bn) worth of deals agreed so far this year, nearly double last year's total according to LSEG data. This surge in foreign buyers snapping up British firms at premiums as high as 60% above their market value has sparked both excitement and unease among City insiders.
The trend is exemplified by Easyjet's potential £5bn+ takeover talks with US private equity firm Castlelake, while Ramsdens' acceptance of a £175m offer from American rival Firstcash is another high-profile deal. Even FTSE 100 constituent Segro rejected a £12.6bn offer from Californian real estate investor Prologis last month. While this activity is generating fees for advisors, some bankers are concerned about the long-term implications for the London Stock Exchange.
Analysts attribute the exodus of companies to years of outflows from UK equity funds and persistently sluggish valuations compared to international markets. Peel Hunt data shows that the average offer price for the 29 bids announced this year has been at a premium of 36% above market value. Deals like Intertek's £6.1bn sale saw premiums of approximately 60%, prompting James Ashton, chief of the Quoted Companies Alliance, to question why overseas buyers consistently value British growth companies higher than domestic investors.
Some figures have called for policy intervention to encourage domestic investment. Andy Haldane, an adviser to Andy Burnham and chair of the British Chamber of Commerce, has suggested using the tax system to incentivise British investors to back homegrown firms. He proposed a 'tilting of the playing field' in the tax system to create a domestic bias, although the government has previously faced resistance to mandating pension funds to invest in UK companies.
While there are tentative signs of a potential shift, with UK equity funds seeing their first net inflows since November 2024 in May, according to Calastone data, City figures believe the trend of takeovers will continue without increased domestic backing. Bankers hope that a new wave of listings from companies like Waterstones and fintech firm SumUp could help replenish the market post-summer. However, a broader revival in Initial Public Offerings (IPOs) has been hampered by global volatility, including geopolitical events and the impact of AI on technology stocks, leading to postponements of anticipated listings.