UK now second most targeted country for mergers and acquisitions

The UK is now the second most targeted nation for mergers and acquisitions globally, behind only the US, as deals in the country have surged to $76.1bn (£60.2bn) so far in 2024.

UK mergers and acquisitions have been 88 per cent higher than this time last year but are still below the values in the previous three years, data from the London Stock Exchange Group revealed.

Despite the value of M&A deals surging since last year, the number of deals has actually dropped by 25 per cent, though still totals over one thousand.

So far this year, the UK has been the target of seven per cent of global mergers and acquisitions, or $47.8bn (£37.8bn), compared to last year when it was the fifth most targeted nation and accounted for four per cent of M&A.

The value of domestic M&A has increased 167 per cent since last year, while foreign companies targeting UK companies has increased 118 per cent.

45 per cent of mergers and acquisitions targeting UK companies have been carried out by an overseas acquirer, with the largest being the targeting of paper and packaging group DS Smith.

International Paper’s recent takeover offer follows a £5.1bn bid from Mondi earlier this month, pushing materials to be the most targeted sector in the UK this year.

Meanwhile, real estate has been boosted by the mega-merger of LXi REIT and Londonmetric and Barratt’s offer for Redrow, and the financial sector has been lifted up by Nationwide’s plan to buy Virgin Money.

Private equity firms have also seen an increase in deals, with $4.6bn (£3.6bn) so far in 2024, 39 per cent more than last year but lower than the four years before that.

The value of UK outbound M&A has declined 14 per cent year-to-date, to a five-year low of $14.3bn (£11.3bn).

Lucille Jones, senior manager at London Stock Exchange Group Deals Intelligence, said: “After two consecutive years of declining activity, a period of relative stability as inflationary pressures eased and interest rates stabilised, has stimulated mergers and acquisitions in the UK.

“M&A involving a UK target more than doubled and now accounts for the highest share of global M&A in three years, with increases in both domestic and inbound activity. For now, with improved confidence, CEOs and boards are taking advantage of this period of calm ahead of the general election to make their moves.”