UK board members brace for wave of takeover bids

Non-executive directors of UK companies and bracing for a wave of takeover bids throughout 2025 as British firms face continual share price weakness.

As many as 80 per cent of non-executive directors said that their companies are more vulnerable to a takeover bid, according to data from investment bank Peel Hunt.

Last year, a host of significant UK companies were taken over, including the £5.7bn merger of UK cardboard box giant DS Smith and US rival International Paper and investment platform Hargreaves Lansdown’s £5.4bn sale to a group of private equity buyers.

Other multibillion-pound deals included a US private equity firm’s £4.3bn takeover of cybersecurity company Darktrace, Czech billionaire Daniel Kretinsky’s £3.6bn swoop for Royal Mail owner IDS, and Nationwide’s £2.8bn purchase of Virgin Money.

Indeed, 92 per cent of non-executive directors told Peel Hunt that they were expecting an increase in takeovers of UK companies more widely this year.

A majority of those surveyed attributed an expected rise in takeovers to share price weakness and UK public market undervaluation, with two thirds strongly agreeing that the factors were affecting the companies they represent.

However, only 15 per cent said they were sure that they could confidently assess shareholder appetite for an offer if their firm faced a takeover bid.

“Notwithstanding ongoing efforts to identify solutions – the current challenges facing UK equity markets are having an enduring impact on UK plc share prices and, consequently, the vulnerability of those companies to unsolicited, and potentially unwelcome, bids,” said Michael Nicholson, head of advisory and M&A at Peel Hunt.

“Today more than ever, it is essential that boards are ready to enter bid situations with both a firm grasp of the intrinsic value of the company; and a clear view of shareholders’ appetite for a bid at various prices.

“Assessing an offer proposal without one or the other risks leaving companies exposed to bidders seeking to acquire UK plcs on the cheap.”

Despite the overall trend of a rise in takeovers, the number of foreign investors launching M&A deals for UK companies actually plummeted in the fourth quarter of last year.

The number of foreign companies buying UK firms fell to its lowest level since the pandemic during the quarter, dropping from £10.4bn to £4.5bn.