Key Takeaways
- Prologis’ bid for UK real estate firm Segro is the latest in a string of bids for UK companies as strategic buyers take advantage of discounted valuations.
- Five FTSE 100 firms, including Schroders and Intertek, have received approaches so far in 2026.
- UK stocks are increasingly being driven by sentiment rather than underlying business quality, fund managers say.
Bids for Easyjet EZJ and Segro SGRO are the latest in a string of bids for UK companies, as strategic buyers seek to take advantage of the valuation gap between the UK and its global peers.
US real estate firm Prologis announced a £12.6 billion offer for FTSE 100 REIT Segro on June 24, which was swiftly rejected by the company’s board, which said the proposal was “opportunistically timed.”
EasyJet’s directors rejected a fourth bid, this time for £4.7 billion, from US private equity firm Castlelake, saying the offer “substantially” undervalues the company. But the budget airline has opened its books to the suitor with a view to the bidder improving the offer.
Segro is the fifth FTSE 100 company to receive a formal bid this year, joining the likes of testing company Intertek ITRK and asset manager Schroders SDR. Strategic buyers are also targeting the FTSE 250, with sugar giant Tate & Lyle TATE set to be taken over by US ingredients firm Ingredion.
“What we’ve seen is strategic M&A within the UK—companies having specific targets in mind and going after those targets,” says Michael Field, chief European equity analyst at Morningstar. “It’s not that the UK is a market where everything is getting taken over. It’s that activity is very strategic and very specific. Certain targets with depressed valuations—such as easyJet— are at the mercy of larger companies that see now as the time to swallow them up and bring down their own cost base.”
Which UK Stocks Have Attracted M&A Interest This Year?
The five FTSE 100 takeover offers eclipse the single official bid made for Anglo American AAL in 2025 and match the number received in the whole of 2024.
FTSE 100
- Segro: £12.6 billion all-share takeover proposal rejected by board
- Schroders: £9.9 billion all-cash takeover by US asset manager Nuveen
- Beazley: £8.1 billion all-cash takeover by Zurich Insurance
- Intertek: £10.7 billion acquisition by EQT
- DCC: £5.7 billion takeover by a private equity consortium including KKR and ECP
FTSE 250
- Tate & Lyle: £2.7 billion all-cash takeover by Ingredion
- EasyJet: £4.3 billion takeover approach by Castlelake rejected
- Senior: £1.3 billion all-cash takeover by a private equity consortium including Blackstone
- Spire Healthcare: £1 billion takeover by UK private equity firm Toscafund Asset Management
- Empiric Student Property: £723 million takeover by Unite Group
- Bluefield Solar Income: £548 million cash takeover by Drax
Why Are FTSE Companies Attracting Bids?
The valuation gap between UK stocks and their global peers is driving takeover interest as strategic buyers take advantage of the discounts on offer in UK stocks, fund managers say. The Morningstar UK Index trades at a P/E ratio of 12.8, compared with 21.6 for the US market. UK companies also trade at a discount to most European and Asian markets.
“There is effectively a London postcode discount between comparable companies,” says Clive Beagles, a manager on the Gold-rated JOHCM UK Equity Income Fund. “Take Standard Chartered and DBS Bank in Singapore. They have almost identical geographic footprints, yet one trades at a roughly 40% discount to the other. IAG trades on around half the earnings multiple of Delta Air Lines, despite having a better balance sheet and generating a higher return on capital employed. Why? Because it is listed in London.”
Given the size, depth, and global leadership of the US market, some premium to UK assets is entirely justified, according to Mark Ellis, founder and CIO at Nutshell Asset Management. However, he thinks the current valuation gap is difficult to overlook on fundamentals alone, which is creating opportunities for strategic buyers. “The UK market increasingly resembles one where prices are being driven more by sentiment than by underlying business quality,” he says. “As a result, overseas acquirers are purchasing globally diversified, cash-generative companies at valuations that would be difficult to find elsewhere.”
Morningstar’s Field says at least some of the deals are happening in sectors which have come under pressure in recent years, such as ingredients makers and asset management, with competitors seeking to buy rivals to increase cost benefits through scale and distribution. “Intertek is a testing company, very much in the mould of Bureau Veritas and SGS, and it operates in a space where consolidation has already been an ongoing theme. It’s a hugely fragmented market,” he says.
“Intertek had also been trading at a discount to those other two for quite a few years, and part of that is attributed to its UK listing and things like that. It makes sense that it would become an M&A target in its own right, particularly with the share price depressed,” Field adds. “Similarly with Tate & Lyle, ingredients companies have been in the doldrums for a while now due to high inflation and pressure from Chinese competitors.”
FTSE 100 Stocks Look Undervalued Today
Morningstar data shows the UK market entered 2026 trading at its fair value after a strong year in performance terms for UK equities last year. Since the outbreak of the Iran war, however, UK companies have dipped into undervalued territory, currently trading at an average 10% discount to their fair values.
Morningstar’s Field says that, given the valuations of UK equities compared with international peers, the M&A trend seems likely to continue, “unless something drastic changes in the UK. The only thing I can think of that might push back against it a little is currency. The US dollar has been weak over the last year, and that has made UK targets more expensive for US companies.”
M&A has also surged among mid- and small-cap stocks, where the valuation gap is even wider.
Another reason for the M&A boom could be the UK’s takeover rules. Job Curtis, manager of the Gold-rated City of London Investment Trust, says the UK has a fairly open system of corporate control compared with other markets: “If you’re trying to do a hostile takeover in a country like France or Japan, all sorts of barriers are put up. But in the UK, shareholders are generally willing to sell if it’s a fair price, and the government restrictions are very minimal. Compared with most countries, the fairly open systems of the UK and US mean you can buy companies here, which is not possible in some of the other markets.”
Is the UK M&A Boom Good for Investors?
Takeover bids often boost returns for shareholders, at least in the short term. When a company receives a bid at a premium to its share price, shares usually rise to reflect the price being paid by the acquirer. Tate & Lyle stock surged 45% in the day’s trading after the announcement of the Ingredion deal. Similarly, Schroders, Beazley, Intertek, and DCC shares have enjoyed an uplift since the announcement of bids.
However, fund managers argue that the shrinking size of UK capital markets is negative for investors in the long term. “At the current rate of M&A, there will be no UK stock market left in 10 years. We’ll have nothing left,” says J O Hambro’s Beagles. “Until something more fundamental changes, this will continue. In the meantime, it can feel like a sugar rush. Investors can still make strong returns, and we’ve seen that in performance over the near and long term. But ultimately, it is not in the country’s interest to have a shrinking market that heads toward zero. Until the valuation gap meaningfully closes, this trend is going to persist.”
Mark Ellis, founder and CIO at Nutshell Asset Management and manager of the Silver-rated global equities Nutshell Growth Fund, says policymakers should be looking at ways to strengthen the competitiveness of UK capital markets and support domestic investment. “That can take many forms, but the removal of stamp duty on UK equity purchases would be a positive step in our view,” he says.
“Lower transaction costs could improve liquidity, deepen capital markets, and encourage greater participation from both domestic and international investors,” Ellis adds. “Over time, that should help narrow valuation discounts and ensure that more of the value created by Britain’s best companies accrues to UK shareholders rather than overseas acquirers.”
