City grandees have raised the alarm over a wave of foreign firms acquiring London-listed rivals, with unsolicited offers pushing the combined value of UK companies poised to leave the bourse to £43bn. Some 22 listed companies have already accepted or received bids this year, including blue-chip names like Beazley and Schroders, which are no longer listed in London.
Recent M&A Activity
This week saw a spate of merger and acquisition activity that took the total value of targeted companies beyond £40bn, unnerving several City figures who fear a years-long pattern of delistings and take-private deals is accelerating. On Thursday, sugar maker Tate & Lyle received a £2.7bn offer from US rival Ingredion, while private healthcare provider Spire's board said it was "minded to recommend unanimously" an offer from British investor Toscafund. Private equity group EQT's long courtship of FTSE 100 lab testing group Intertek moved closer to conclusion after it sweetened its offer to £10.6bn.
"Losing a few companies is unfortunate, losing a large number is careless," said Charles Hall, head of research at Peel Hunt. "The rate of departures from the London market definitively shows a lack of care."
Foreign Buyers Exploit Low Valuations
The wave of dealmaking is largely driven by foreign rivals and asset managers, sparking fears that the UK economy risks missing out on future growth prospects of targeted firms. Stubbornly low valuations of London-listed firms have lured competitors and alternative investors from overseas, hoping to strike cut-price deals. EQT's latest Intertek offer values shares at 62 per cent above their pre-bid closing price, while Zurich's successful cash offer for Beazley represented a 60 per cent premium.
"The S&P 500's total market cap is 25 times that of the FTSE 350," said Chris Beauchamp, chief market analyst at IG. "UK companies are an easily digestible meal for many US rivals, and despite sterling's bounce over the last three years, it is still well down on the level of the mid-2010s, making British firms seem cheap."
Valuation Gap and Reform Calls
Despite the FTSE 100 posting the best performance of any major index in 2025, British equities remain among the cheapest in the developed world. Blue-chip shares trade at an average of 15 times earnings, while FTSE 250 and other main market stocks are valued at 10 to 13 times earnings. In contrast, the S&P 500 trades at 32 times earnings, and the Nasdaq at 33 times.
James Ashton, chief executive of the Quoted Companies Alliance, urged ministers and regulators to fill the void left by the M&A flurry and double down on efforts to "unleash capital flows" from institutional investors like pension funds. Under the Mansion House Accord, pension funds vowed to invest at least 10 per cent of capital into private and small-cap equities, with half in British assets. "We need the pension funds to stop equivocating and get on with it," Ashton said, adding that focus should be on why companies leave the market, including depressed valuations and the cost of being public.
Tax Incentives and Domestic Investment
Hall suggested the government should restrict tax carveouts and subsidies enjoyed by pension funds and savers to UK assets. Currently, trading London-listed shares is more expensive than on other major markets, pushing capital overseas. "Tax incentives should prioritise domestic investment – it makes no sense to fund the growth of businesses overseas with UK taxpayers' money," Hall said. "Companies and founders should be encouraged to scale, stay and IPO in the UK rather than sell too early or list overseas. We have all the tools to make UK equities great again – we just need to be bold enough to recognise the importance for our economic security and long-term growth."
