High value deals for Main Market companies
2024 saw the return of big-ticket deals, with 17 of the 56 offers (30%) having a deal value over £1 billion, compared to only four in 2023 (7%). Unsurprisingly, this meant there was a notable increase in offers for companies listed on the Main Market – 30 of the 56 offers (54%), compared with 18 of 57 in 2023 (32%).
Industry preferences
The clear front runner in terms of sectors in 2024 was real estate, comprising 16% of firm offers, followed by the financial sector which had a 12.5% share of firm offers. Computer/electronic equipment and construction/industrials were the next most popular sectors, each accounting for nearly 11% of firm offers made. There was notably less activity in the healthcare sector.
As part of the significant interest in real estate businesses, several listed UK Real Estate Investment Trusts (“REITs“) were subject to firm offers, likely a consequence of them having continued to trade at significant discounts to their net asset value (“NAV“), which stifles property investment managers and reduces liquidity in the REITs shares. The REIT market saw notable consolidation, with buyers looking to benefit from cost synergies and de-listing savings, and we have continued to see a lot of interest in this sector in the early part of 2025.
International bidders
UK public companies remained an attractive investment for overseas bidders, with bidders on 34 of the 56 firm offers (61%) having origins/ownership outside the UK. Bidders from the US were again leading the pack of overseas bidders, comprising nearly half of such offers (16), including offers for Learning Technologies Group plc and Loungers plc. UK assets will continue to be attractive to US bidders whilst UK equities trade at notable discounts to their US peers.
We saw US bidders continue to be interested in UK technology companies, and in the construction and industrials sector, including the offer by NYSE-listed company Quanex Building Products Corporation for Tyman plc.
Structure
In line with the trend in recent years, a scheme of arrangement, where a firm offer is recommended by the target’s board, remained the preferred structure for public takeovers in 2024. 52 of 551 firm offers were implemented by way of a scheme of arrangement (almost 95%), with the remaining three implemented by way of contractual offer.
1 Excludes the tender offer in respect of Gama Aviation plc.
Strategic offers, P2Ps and consortium bids
Whereas 2023 saw the revival of private equity backed firm offers, this trend slowed in 2024 as strategic offers made a comeback. Of the 56 firm offers made in 2024, only 24 were backed by private equity or other funds (43%), as compared to 36 of 57 firm offers made in 2023 (63%). However, such bids had a higher aggregate value, with one third having a value of over £1bn – at the top end these included the offers for Hargreaves Lansdown plc and Darktrace plc.
There were three firm offer announcements from consortium bidders last year (two fewer than 2023), ranging from a deal value of £225m (Aquis Exchange plc) to £5.44 billion (Hargreaves Lansdown plc).
Competing bids
There was a notable rise in the number of competing firm offers in 2024, up from one to five – at the higher end, these included the competing offers for Hipgnosis Songs Fund Limited and Spirent Communications plc.
Acquisition finance
Despite continuing challenges in the debt market, 50% of the firm offers included debt financing (up 1% from the previous year). With the direction of travel of interest rates looking hopeful, this should help contribute to the availability and pricing of acquisition financing.
Increasing shareholder activism
There were several examples of shareholder activism and engagement of various forms in 2024, including indications that strategic shareholders are prepared to voice their views publicly. For example, Custodian Property Income REIT plc’s recommended offer for abrdn Property Income Trust Limited was rejected by shareholders. As a result of insufficient votes to approve the scheme of arrangement, the transaction was terminated and the scheme lapsed, with the target board confirming that it planned to take steps to implement a managed wind-down, subject to shareholder approval. In another example, the majority shareholder in Mulberry Group plc came out publicly against a potential bid from Frasers Group plc, stating that it had “no interest” in either selling to the potential bidder or providing any undertaking in relation to the potential sale, and the Mulberry board rejected the possible offer, which it considered did not recognise its future potential value.
Continued valuation gaps
Valuation gaps between target boards/shareholders and bidders continued, and we saw several examples of shareholders privately and publicly objecting to bid prices, and encouraging target boards to ‘go shop’ for possible interlopers at a higher price. Despite this, only five of the 56 bids (9%) were subject to increased offers. All- and partial-share offers remained popular (both listed and unlisted): one way of attempting to bridge this valuation gap.
On the flipside, we saw examples of ‘bear hug’ announcements made by bidders in situations where a recommendation was not forthcoming from the target board, including the possible offer for TT Electronics plc.
What is a “bear hug”?
An announcement of a possible offer made by a potential bidder which wants to make target shareholders aware of the existent and possible terms of its interest. The hope of the potential bidder is that target shareholders will apply pressure on the target board to engage in negotiation with the potential bidder. This tactic is typically used when a potential bidder is struggling to get engagement from the target board.
Irrevocable undertakings
Shareholders (both directors and non-directors) continued to show their support for firm offers made in 2024 in the form of irrevocable undertakings to accept/vote in favour of the offer. Bidders on 16 of the 56 firm offers (29%) obtained irrevocable undertakings in respect of at least 30% of the target’s issued share capital, albeit this figure was down from 2023 (35%).
Importantly, bidders continued to receive support from non-director shareholders, albeit at a slightly lower level than last year, with 35 of the 56 firms offers in 2024 (63%, down from 72% in 2023) having the support of non-director shareholders in the form of hard irrevocables (11 offers), semi-hard irrevocables (17 offers) or a combination of hard and/or semi-hard and/or soft (7 offers).
