This year's United Kingdom mergers and acquisitions (M&A) market hit a record high since the COVID-19 pandemic. In particular, large-scale deals led by U.S. private equity are seen as breathing life into the market.
According to London Stock Exchange Group (LSEG), foreign investors spent about $142 billion (about 210.316 trillion won) over the past year to acquire United Kingdom corporations. That is a 74% surge from 2024, while the total United Kingdom M&A volume during the same period rose 20% to $367 billion. As the pace of acquisitions by foreign capital far outstripped overall M&A growth, overseas investors effectively drove growth in the United Kingdom deal market.
Investment banks point to structural undervaluation in the United Kingdom stock market as the backdrop for this trend. Philip Noblett, head of the United Kingdom and Ireland institutional sector at Jefferies, said, "The United Kingdom stock market remains substantially undervalued," and noted, "Foreign investors continue to show interest because valuations are attractive compared with both the United States and United Kingdom competitors."
Some also say deregulation under the Donald Trump administration spurred U.S. investors to move into the United Kingdom. U.S. IT outlet The Information noted, "Thanks to the Trump administration taking a more favorable view of mergers, corporations are pursuing transactions they would not have considered in the past." In fact, more than half of the foreign capital that acquired United Kingdom corporations this year came from the United States.
Private equity's presence also stands out. For example, in the third quarter, Apollo Global Management fronted European life insurance group Athora to acquire the United Kingdom Pension Insurance Corporation Group (PICG) for £5.7 billion, and U.S. private equity firm Advent agreed to buy the cleaning products institutional sector of consumer goods company Reckitt for $4.8 billion. In particular, private equity firms are pursuing a strategy of taking listed companies private, and some critics warned that this tack could sap the London market's competitiveness.
However, a rise in transaction value does not mean the entire market is booming. The number of M&A deals actually fell 16% this year, indicating that while large deals increased, small and mid-sized transactions contracted.
In addition, domestic M&A among United Kingdom corporations fell sharply, with the value of domestic transactions plunging 54% from a year earlier to $44 billion, the lowest since 2016. Analysts said Finance Minister Rachel Reeves' budget pushed taxes to an all-time high, and a weeks-long policy vacuum further chilled dealmakers.
Anthony Parsons, chair of the capital markets institutional sector at Deutsche Bank, said, "The United Kingdom economy's growth is slowing and GDP forecasts have been revised down, prompting corporations to seek M&A strategies," adding, "Strategic investment by foreigners is likely to increase next year as well."