Citi U.K. CEO Tiina Lee stated that U.K. M&A activity is 'on fire,' driven by large-cap companies simplifying their businesses and overseas buyers targeting cash-generative British assets [1]. Lee highlighted examples such as McCormick's transaction with Unilever's food business and Diageo's sale of its Indian cricket team as evidence of companies sharpening their focus on core competencies [1]. She also noted strong foreign investment, with 28 transactions announced so far this year, particularly in businesses with solid cash flows and international profiles [1]. U.K. companies are also investing overseas, as seen in Rosebank's acquisition of MW Components earlier this year [1].
Lee emphasized that the strength in dealmaking contrasts with a quieter IPO market, with M&A currently providing the main momentum in U.K. capital markets [1]. A key driver is the valuation gap between the U.K. and U.S., making well-established British companies with strong cash generation and resilient business models highly attractive to international buyers [1].
According to PwC data, the number of deals in the U.K. market fell by around 12% last year, but the total value of those deals increased by roughly 12% as average deal size soared 30% [1]. This indicates that strategic buyers and private equity firms are increasingly targeting high-quality assets rather than pursuing volume [1]. Major deals included Anglo American and Teck Resources' £15.2 billion cross-border merger, Direct Line's £3.7 billion takeover by Aviva, and DoorDash's £3.9 billion acquisition of Deliveroo [1].
Britain's IPO market has remained relatively weak in recent years. PwC described 2025 as London's strongest year for IPO activity since 2021, though volumes were still well below the levels seen the prior year [1]. EY data shows 23 companies listed on the London Stock Exchange over 2025, with nine main market listings and 14 IPOs on the junior 'AIM' market, raising around £2.1 billion, up 170% on the previous year [1]. However, there were only two IPOs in the first quarter, with just one on London's main market, according to the Financial Conduct Authority [1]. Lee reiterated that M&A activity is providing the main momentum for U.K. capital markets [1].
CONCLUSION
U.K. M&A activity is experiencing significant momentum, driven by large-cap firms simplifying operations and strong interest from overseas buyers. Despite a subdued IPO market, the increase in deal value and focus on high-quality assets underscore the attractiveness of British companies to international investors. M&A is currently the primary driver of U.K. capital markets.