UK to see ‘transformational’ takeovers in 2024

TAKEOVER deals will pick up in the UK this year as British companies and institutional investors are optimistic about the outlook for acquisitions, a survey by investment bank Deutsche Numis showed.

Almost nine out of 10 UK corporates see a positive picture for M&A in 2024, with larger transactions expected. Nearly a quarter of the survey’s respondents are more likely to go after “transformational” deals, double last year’s figure, reflecting growing confidence as market conditions improve.

“Both UK corporates and investors are starting the year with a sense of positivity on M&A,” said Stuart Ord, co-head of M&A at Deutsche Numis. “Corporates’ ambitions for larger deal sizes, higher levels of cross-border dealmaking and collaborative deal structures could start to reshape the UK M&A landscape in 2024.”

Deteriorating business confidence and tough financing conditions suppressed M&A in 2023, with Britain seeing just shy of US$200 billion in completed and pending deals. That was a drop of 25 per cent from 2022’s tally, and down more than 60 per cent from 2021’s post-pandemic rush, data compiled by Bloomberg show.

However, Deutsche Numis noted a “promising increase” in UK M&A activity in the last few months of 2023 as confidence grew in forecasts for a slowdown in inflation and likely drop in interest rates this year.

The financial sector was seen as the most attractive for M&A, followed by real estate, according to the survey of 200 FTSE 350 board directors and 200 institutional investors conducted in December 2023. Other key findings highlighted crossborder dealmaking is expected to rise, with 89 per cent of companies seeing the UK as vulnerable to a takeover.

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The survey’s respondents also pointed out there are still hurdles to deals, including antitrust regulation, the availability of high-quality takeover candidates and access to capital. Last year saw the least money raised in UK initial public offerings for decades. BLOOMBERG