2024 UK Public M&A Review by Ashurst

The year 2024 brought about significant political changes worldwide, with numerous elections resulting in shifts in power. Notably, the UK saw Keir Starmer’s Labour party secure a landslide victory with 412 seats, unseating the Conservatives. This political upheaval was accompanied by global tensions, including conflicts in Ukraine and the Middle East. Despite these disruptions, inflation in the UK showed signs of decreasing, prompting expectations of further interest rate cuts in 2025. The aftermath of the UK election and budget gave hope for a more positive economic outlook compared to other European economies, although uncertainties remained, such as Labour’s fiscal policies and the impact of the Trump administration’s approach on tariffs and deregulation in the US.

The political turmoil of 2024 had a discernible impact on the UK public M&A market, leading to sporadic activity throughout the year. Deal values notably soared compared to the previous year, with more than £1 billion firm offers announced in Q1 2024 alone, surpassing the total for all of 2023. Moreover, average deal values increased significantly, and there was heightened competition for desirable assets, evidenced by rival bids and substantial premium offers even on high-value assets.

Towards the end of the year, there was an optimistic uptick in deal activity, culminating in the agreement of terms for several high-profile transactions. This positioning in the market boded well for a busy start to 2025, with expectations of continued target-led sale processes as target boards and shareholders grappled with subdued valuations. Increased flexibility in private sale processes was also anticipated to be leveraged by target companies, while shareholder engagement continued to play a pivotal role in influencing board strategies and encouraging more targets to enter the market.

Furthermore, the more stable political environment, coupled with potential interest rate cuts, the resurgence of large-scale financing, and significant levels of “dry powder” held by private equity funds, made the UK market an attractive prospect. The FTSE 100’s emphasis on oil, banking, and utility stocks could offer a contrasting view to the more volatile global tech valuations, providing a unique investment landscape.

Despite the challenging circumstances, various deals were announced in Q4 of 2024, showcasing Ashurst’s involvement in notable transactions. These included Tritax EuroBox’s recommended offer by Brookfield Asset Management, Equals Group’s strategic review and recommended offer by a consortium of funds, Renewi’s final possible offer from Macquarie, and Citigroup & Goldman Sachs’ involvement in the offer for Direct Line by Aviva, among others.

In summary, the tumultuous political landscape of 2024 significantly impacted the UK public M&A market, leading to fluctuating activity levels throughout the year. However, the market’s resilience and the completion of high-profile deals positioned it well for a promising start in 2025.