Why this M&A boom is a problem for Britain

A running total of merger & acquisitions (M&A) in 2026 has hit £74.2 billion - equivalent to the size of drug giant GSK (LSE:GSK) - as overseas firms continue to circle “attractively valued” UK assets.

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The year-to-date figure comprises 42 ongoing bids worth £100 million or more, which is two more than the whole of 2025 when the valuation of dealmaking amounted to £35 billion.

This year's total has been bolstered by £46 billion of blue-chip deals involving Beazley (LSE:BEZ), Schroders (LSE:SDR), DCC Energy (LSE:DCC), Intertek Group (LSE:ITRK) and Segro (LSE:SGRO) and representing 2% of the FTSE 100 index.

A further £21.4 billion of activity has taken place in the FTSE 250, with moves for 13 firms including easyJet (LSE:EZJ), Rotork (LSE:ROR), Tate & Lyle (LSE:TATE) and Bodycote (LSE:BOY) worth about 6% of the mid-cap benchmark.

There have been a further £3.9 billion of deals equivalent to 10% of the FTSE Smallcap index, and £2 billion of AIM M&A activity accounting for 3% of the junior stock market.

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City bank Peel Hunt, which compiled this week's figures, said the “exceptionally high” levels of M&A action fuelled concerns about a material depopulation of the UK equity market.

Since 2023, there have been 166 completed bids of £100 million or more with a total value of £180 billion. This compares with 11 initial public offerings (IPOs) of more than £100 million for a total value of £6 billion.

Peel Hunt said: “UK companies are seen as attractively valued, which makes M&A more likely and IPOs less so. This can be seen by the number of contested offers, the multiple increases in offer prices, and the average premium of 45%.”

It pointed out that domestic capital outflows from UK funds have now been running consistently for five years, which depresses valuations and results in lower IPO demand.

The performance of the overall market, however, has been supported by a combination of inflows from overseas, share buybacks and the unprecedented pace of M&A.

Other factors driving takeover activity include the UK's belief in open markets, which results in few blocking stakes or poison pills. Most of the companies being acquired also have a broad international footprint, which adds to the attraction for both corporate and financial buyers.

Overseas bidders represent 27 of this year's overall total, which at 64% is broadly similar to the trend in 2024 and 2025. Corporate buyers account for 25 or 60% of the bids, with the remaining 17 from financial backers.

There has been just one IPO with a market cap of over £100 million, although hopes for a pick-up in new listing activity have been boosted by tomorrow's start of unconditional dealings by the £5 billion-valued Airtel Africa division AIRTEL MOBILE COMMERCE NV (LSE:AMC).

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Peel Hunt said: “We are encouraged by the IPO pipeline, with a number of larger companies looking to list in the UK. However, the rate of M&A is still materially larger than the number of new companies.”

In addition, more UK companies are set to list in the US this year than in the UK.

Peel Hunt said: “That should be a statistic that makes everyone recognise the importance of fundamental change to increase domestic capital and encourage companies to list in the UK.”

The UK has already seen seven large companies move their listing overseas since 2023, taking £120 billion of market cap with them. Seven UK-based companies have also chosen to IPO overseas, with a market cap of £270 billion.

As the UK becomes a smaller proportion of MSCI World (down to 3.4% from 4.2% five years ago and 6.5% 10 years ago), there is pressure from funds to reduce exposure. The launch of mega IPOs in the US exacerbates this trend as their free floats increase and they enter indices.

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Efforts to make the UK an attractive listing venue have included regulatory change, alongside recognition that savers in the UK are too risk averse and under-exposed to growth assets.

The bank continues to believe that turbocharging UK equity markets can be done at pace by using multiple levers around pensions, ISAs, capital gains tax and stamp duty.

It added: “There is greater fanfare around listing in the US, from ringing the bell to profile in Times Square. We need to recognise the importance of IPOs to the health of the UK economy and applaud companies that list.”