Public M&A activity increased again in 2023, owing largely to a series of offers made in Q4 (39%). The total number of firm offers announced in 2023 for UK public companies listed on the Main Market or AIM was 57, an increase of 24% from 2022 (46 firm offers), despite a backdrop of challenging economic and political conditions.
There was a revival of private equity backed offers, which accounted for 36 of the 57 offers (63%), compared to approximately one-third of offers made in 2022, reflecting PE/sponsors’ ability to creatively deploy capital through slower market conditions. We continue to see a number of our PE clients consider potential public transactions, despite the ongoing uncertainty surrounding the cost of lending, owing to their wealth of dry powder and access to (relatively) liquid debt markets.
Technology, financial and healthcare listed companies remained popular with buyers, together accounting for 28 of the 57 offers made (49%). 39 of the 57 offers were for public companies listed on AIM (68%), compared with 21 of the 46 offers in 2022 (46%). Consequently, public M&A activity was strongest in the smaller and mid-cap space, with the number of public bids with a deal value under £250m up 89% from 2022, and those with a deal value over £1bn (of which there were only four), down 69% from 2022.
Target boards and bidders continued to grapple with valuation gaps, with a perceived undervaluation of UK public assets (relative to private sale expectations). FTSE 350 UK plcs are also currently trading at the largest discount to the US MSCI index since January 2022[1], so North American buyers may continue to see UK plcs as relatively cheap. US bidders were involved in 17 of the 57 offers announced in 2023 (30%), unsurprisingly up from 11 offers in 2022 (24%).
The average offer premium (being the offer price compared to the trading price immediately before the offer) was approximately 54% in 2023, up from approximately 44% in 2022. A consistent trend with 2022, strategic/private bidders offered the higher premiums.
The information and statistics contained in this publication are based on the 57 firm offers announced in 2023 for UK public companies listed on the Main Market and AIM, including the offer for Holders Technology plc (a tender offer treated by the Panel as an acquisition by a concert party).
