Foreign companies drive £19bn M&A surge as UK firms ‘attractively valued’
Takeovers of British firms reached the highest level in nearly three years as several multi-billion pound transactions made by foreign companies pushed up the value of mergers and acquisitions (M&A), official data has shown.
Inward M&A deals in the first three months of the year exceeded £19bn, nearly four times that seen in the last quarter of 2024, according to the Office for National Statistics.
The £5.8bn buyout of packing company DS Smith by US firm International Paper and Carlsberg’s £3.3bn takeover of drinks group Britvic were highlighted as some of the biggest deals boosting M&A in the first quarter of the year.
The value of UK companies acquiring foreign companies was just £9.4bn by comparison,
The number of inward deals was lower than in all quarters for 2024 and the second lowest figure in a four-year period while outward deals, which cover deals where British companies bought foreign ones, was only slightly lower than levels seen at the end of 2024.
Deal values highest seen since late 2022
Taylor Wessing’s head of corporate Emma Danks said the dip in activity showed that buyers were “taking more time” to look at gaps in valuations.
“While deal volume may have slowed down this quarter, the fundamentals remain strong, with deal values reaching the highest levels seen since late 2022,” Danks said.
“We expect activity to rebound as dealmakers regain clarity on the macro landscape, and as cash-rich corporates and funds increasingly look to deploy capital strategically in a competitive market.”
A recent report by Taylor Wessing and Bayes Business School showed that the UK was still highly sought-after for M&A deals, with growth in technology and energy seen as two areas which could benefit from more takeovers.
The ONS said domestic merger and acquisitions declined to £2.9bn at the beginning of this year following two consecutive quarterly rises in 2024, pointing to the wider prevalence of cross-border deals.
UK companies remain ‘attractively valued’
The Bank of England said in March that growth in dealmaking was “constrained by caution” while investment plans were being put on hold amid uncertainty on global trade and regulations.
But the UK could yet see a further rise in the value of M&A deals after Vodafone agreed a £15bn merger with Three.
Foreign companies could yet still look to UK businesses more if trade deals with the EU and Gulf states materialise.
Patrick Sarch, head of UK public M&A at global law firm White & Case, said new data released by the ONS showed UK companies remained “attractively valued”.
“We expect further takeover interest in UK assets to continue – and in many cases the underlying businesses and revenues are international and well hedged.”