UK Public M&A Update Q1 2024

Overview

Welcome to our review of the UK public M&A market for the first quarter of 2024.

Please find below an overview of UK public M&A activity in Q1 2024.  The link to download the full review can be found at the bottom of the page.

Large cap bids return

We have seen an active start to the year for UK Public M&A (albeit volumes are down when compared with the unusual high with which we ended 2023). Strategic acquisitions, in particular in the real estate and property-linked logistics sectors but also in the financial services sector (e.g. Pollen Street/Mattioli Woods and Nationwide/Virgin Money), have dominated.

Deal values are markedly higher than last year, with more £1bn+ firm offers already announced in Q1 than in the whole of 2023. As inflation and interest rates continue to stabilise, we are seeing positive signs that large-scale M&A is returning.

Is undervaluation a problem in the UK markets?

The perception that UK equities remain undervalued is no doubt driving some of this interest. Commentary from journalists and analysts continues to assert that London-listed companies are trading at record discounts to US-listed companies and that fund managers are less invested in UK equities than many other asset categories.

The significant premia being applied to recent bids (e.g. 104% for Wincanton plc) seems to support this, as does the uptick in competing bids and the rise in target-led sale processes. Whilst this perception remains, we expect well capitalised strategics and PE to continue to take advantage.

Private sale processes under the Code

Continuing this theme, five sale processes were announced in Q1 (Revolution Bars, Jaywing, Renalytix, Saietta and Benchmark). These comprised two strategic reviews and three strategic reviews which included a formal sale process (FSP).

Whilst the Code makes little provision for target-led processes outside of the realm of the FSP, the stigma of financial distress that is often attached to an FSP (as demonstrated in respect of Saietta where the FSP lasted 10 days before administrators were appointed), can make them unpalatable to target boards. When contemplating a sale process, target boards, and their advisers, need to consider the complex disclosure obligations and restrictions early on in the process to determine what the best route might be.

Mandates

The Ashurst UK Public M&A team remained active during the first quarter of the year, with roles that include advising:

• Tritax Big Box REIT on its offer for UK Commercial Property REIT
• Evercore and Centerview on Keysight Technologies' offer for Spirent Communications
• Morgan Stanley on CMA CGM's offer for Wincanton
• Rothschild on Pollen Street's offer for Mattioli Woods, Sign In Solution's offer for SmartSpace Software and The Navigator Company's offer for Accrol
• UBS on Nationwide Building Society's offer for Virgin Money