UK Public M&A Update Q1 2025
01 May 2025
Welcome to our review of the UK public M&A market for the first quarter of 2025. We are also pleased to launch our inaugural UK public M&A podcast in which Tom Mercer, Harry Thimont and Jade Jack discuss in more detail some of topics referenced in our review.
Links to download the full review and to access our inaugural podcast can be found at the bottom of the page.
Overview
What a difference a day makes …
Optimism that Trump's administration would bring about a surge of IPOs and M&A activity rapidly evaporated following a flood of executive orders and the introduction of widespread global tariffs. Trillions of dollars were wiped off global stock markets following the "Liberation Day" announcements, the sharpest declines since the initial days of the COVID pandemic five years ago. A few days later, the President announced a hiatus and markets bounced back. Whether the tariffs are enforced and whether countries decide on retaliatory measures of otherwise, the upheaval and uncertainty being caused will continue to have a significant impact on the markets.
In the UK, whilst the volume of deals announced in Q1 2025 were in line with Q4 2024, transactions have tended towards smaller / mid-cap companies, with a prevalence of takeovers by major shareholders. Given the significant headwinds going into Q2, we expect bidders will hold off on larger investments until there is greater clarity. However, we may see further opportunistic moves in the smaller / mid-cap space.
Offers by major shareholders
An emerging trend we have seen is for parties to acquire substantial stakes in companies (below the 30% Code "control" threshold) and subsequently make offers for the whole under the Code. This approach risks potential bidders being left with an illiquid stake in a public company. Furthermore, holding a significant stake can be unhelpful for a bidder looking to complete an offer using a scheme of arrangement or to implement the ‘squeeze out’ on a takeover offer. However, building a stake in a company over time, and outside of an offer period, can have significant upsides as well. It often reduces the total acquisition cost and can provide a useful blocking stake to any potential interloper.
Tactical leaks
In the last 12 months, there has been an increased level of scrutiny by regulators in relation to leaks. In March, the FCA published Primary Bulletin 54 and the London Stock Exchange hosted a session with panellists from the FCA and the Takeover Panel dedicated to a review of market abuse.
A few key takeaways from a takeover perspective are set out below:
- The Panel expects parties to be prepared for a leak. If an issuer is in receipt of an approach, they should have a leak announcement ready to go and have all authorisations in place to be able to make that announcement within minutes if required (see also Practice Statement 20).
- The prevalence of leaks was referred to as "a lingering sore" in the UK market – the introduction of PUSU deadlines was intended to deter leaks before a deal was ready to be announced. This seemed to work for a period but now practice is slipping again.
- The Panel is seeing a higher number of "tactical leaks" (i.e. where one side is leaking the deal to put itself at a commercial advantage or another party at a disadvantage), in "clear breach" of Rule 2.1 of the Code.
- In recent times, there has also been an uptick in leaks the night before a Rule 2.7 announcement is being released. The Panel finds this just as troubling as any other leak as providing certain information to news wires and not sharing the same via an RNS so everyone can access it is not promoting an orderly market. Leaks via news sources mean that (1) only certain readers have access and (2) readers can't tell if information is true or false.
- Recently, the Panel has taken steps with a view to clamping down on this and is investigating leaks more thoroughly. It is the view of the Panel that not many leaks occur "inadvertently" and, more often than not, a leak occurs because someone wants it to. This is in clear breach of the Code.
- It was noted that the Panel and the FCA have a close relationship and will share information with one another where an active investigation is taking place.
Mandates
In the last quarter, Ashurst's UK public M&A mandates included advising:
- Renewi on its recommended offer by a consortium of Macquarie and BCI;
- The International Stock Exchange on its offer by Miami International Holdings;
- Foresight Group on its possible offer for Harmony Energy Income Trust;
- Time Out Group on a new convertible loan note instrument and Rule 9 waiver; and
- RBC Europe & PricewaterhouseCoopers on the offer for BGBI Global Infrastructure.
