The £3.1bn acquisition of Mitie by OCS marks a significant milestone in the UK's takeover season, with the deal representing an 11th transaction worth over £1bn this year alone. This trend is expected to make 2026 a record-breaking year for deals of this magnitude since the pandemic, with Russ Mould, Investment Director at AJ Bell, noting that the total value of live or completed bids could reach a substantial £69.3bn if all proposed transactions are finalised.
This sum equates to 2.4% of the combined market capitalisation of the FTSE All-Share and AIM All-Share indices, underscoring the significant capital being deployed in these acquisitions. The flurry of takeovers, coupled with a notable decline in initial public offerings (IPOs), is heightening concerns about the London market's contraction. Data from Aberdeen reveals that nearly 300 companies have left the FTSE All-Share and AIM All-Share indices over the past five years, resulting in an 11% reduction in total listings.
Buyers are frequently paying substantial premiums to secure these companies, with the average premium offered currently standing at 45%, according to AJ Bell. Some deals have seen even higher premiums, such as Rotork's acquisition at a 73% premium and Apollo's £5.1bn bid for Easyjet, which offered an 80% premium. This suggests that acquirers are willing to pay a significant uplift to secure what they perceive as valuable assets.
Analysts attribute this market dynamic to buyers seeking to exploit perceived valuation disparities between UK companies and their international counterparts. Many potential acquirers believe UK-listed firms are undervalued, presenting attractive investment opportunities. Rebecca Maclean, Investment Director at Aberdeen Investments, clarified that while some companies have received multiple bids due to strong strategic interest in businesses with durable competitive advantages and robust cash flows, the market may eventually 'run out of' such assets if the current pace of takeovers continues.
The ongoing wave of takeovers has prompted calls for government and regulatory intervention to stabilise the London market. Shadow Business Secretary Andrew Griffith criticised what he terms the 'ivory tower approach' to regulation, highlighting concerns that the UK's equity markets may be losing their competitiveness if this trend persists.