Foreign buyers snap up cheap UK companies as dealmaking hits new high

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UK companies attracted a surge of interest from foreign buyers eager to capitalise on cheap valuations, driving British dealmaking in 2025 to a post-pandemic high, new data shows.

Overseas bidders agreed $142bn in takeovers of British companies over the past year, according to data from the London Stock Exchange Group. That marks a 74 per cent uptick from 2024.

The sharp rise in foreign takeovers outpaced a broader 20 per cent rise in UK mergers and acquisitions — which reached a total value of $367bn this year — to reach the highest levels since the pandemic-era boom.

“The UK stock market remains materially undervalued,” said Philip Noblet, head of UK & Ireland investment banking at Jefferies.

“The ratings are still poor to rival companies in the US, but also in Europe, so people keep coming . . . We’re going to see more strategic interest from overseas in 2026 and for bigger companies,” he added.

While the overall value of UK M&A rose 20 per cent, it was mainly driven by a rise in larger deals. The overall number of deals announced in the last year fell 16 per cent. One such headline deal was Anglo American’s $50bn merger with Canadian rival Teck Resources, having rebuffed repeated takeover attempts by Australia’s BHP.

The UK’s bumper year is in the context of a wider dealmaking frenzy, particularly in the US, where President Donald Trump’s deregulatory push has prompted a spate of megadeals topping $10bn.

Just over half of foreign acquisitions for UK companies involved an American buyer, far ahead of any other country, such as DoorDash’s £2.9bn acquisition of Deliveroo.

Private capital investors have been particularly eager bidders for UK assets, with top transactions for the year including the £5.7bn acquisition of Pensions Insurance Corporation by the Apollo-backed European insurer Athora, and Advent’s $4.8bn deal to acquire a majority stake in a portfolio of Reckitt cleaning products.

One particularly popular strategy has been private equity takeovers of publicly listed companies; one reason why London has lost core constituents of its public markets.

Some London-listed groups such as the £4.8bn industrial group Spectris and the £2.7bn fund administrator JTC were acquired by private equity firms KKR and Permira respectively after competitive bidding processes.

The deals also highlighted how UK boards are pushing suitors for higher bids to compensate for their relatively lower valuations. KKR’s final offer for Spectris represented a close to 100 per cent premium compared to the company’s share before a bidding war broke out.

“UK boards have got more self-confidence [ . . . ] boards are likely to hold out on premia for takeover bids that are on average higher than has historically been the case,” said Murray Cox, a partner at the law firm Weil, Gotshal & Manges.

Other significant transactions in the past year include Santander’s £2.65bn acquisition of high street lender TSB.

“Where is M&A happening in the UK? It is in the products we have to sell, which is services; professional services, financial services,” said James Howe, co-head of European M&A at the law firm Simpson Thacher.

The surge of foreign takeovers for UK companies contrasts with domestic dealmaking, which plunged 54 per cent to about $44bn, the lowest level since 2016.

Domestic dealmakers have had to contend with economic uncertainty both overseas — driven by Trump’s widespread tariff plan — and the wait for the UK’s new budget in late November.

Chancellor Rachel Reeves’ budget drove taxes to an all-time high, but it was preceded by weeks of uncertainty that broadly forced dealmakers to sit on the sidelines.

There remains a large number of transactions still in the works: BP is in talks to sell its lubricants business to the infrastructure investor Stonepeak, and Comcast’s Sky is in talks to buy ITV’s television business.

Meanwhile, the private capital owners of UK wealth manager Evelyn Partners, and the UK’s two roadside recovery businesses AA and RAC are all exploring exits.

“You continue to have an economy whose performance is relatively muted and where GDP forecasts have been downgraded, so that creates a necessity for companies to find growth,” said Anthony Parsons, executive chair of investment banking and capital markets at Deutsche Bank. “Private equity continues to see the UK as a very fertile ground for investment.”