Takeover trends in 2026

Differences in valuation expectations between bidders and target boards remain pervasive in UK public M&A, with target boards focused on standalone value and the potential for future upside amidst persistent perceptions of undervaluation.

As a result, where private engagement on terms fails to secure a recommendation, bidders are increasingly putting their proposals directly to shareholders. This enables a bidder to test shareholder appetite broadly and publicly (which could not be achieved by wall-crossing a select few) and encourage them to influence the target board.

Bear hugs can be a helpful tactic for bidders struggling to gain traction with a target board, as any resulting shareholder pressure will create momentum and make it harder for a target board to resist engagement. 

It can also be useful where the bidder has already been identified publicly, and the clock is ticking on its 28-day ‘put up or shut up’ (PUSU) deadline to announce either a firm intention to make an offer or that it does not intend to make an offer.

A bear hug allows a bidder to frame its proposed premium, strategic rationale and the deliverability of the transaction, and can shift the burden of rebuttal onto the target. This can be particularly effective where the bear hug reveals the bidder for the first time, allowing the bidder to set the tone – at least initially – before the target has publicly established its own narrative.

As an extension to the 28-day PUSU deadline is, in practice, only granted at the target board’s request, a bear hug raises the stakes. The bidder takes the risk as to whether the target board will be sufficiently persuaded within the PUSU period to recommend or extend the deadline. If not, it will be timed out and its only options are to walk away or make a hostile offer, which remains very rare in the UK (although this year, Helios has made one for CAB Payments, and Peel made a firm offer for Harworth without a prior bear hug approach).

A bidder should consider from the outset whether it is prepared to go fully hostile. If the target does not agree to a PUSU extension, the implications of proceeding with a hostile bid need careful assessment – including a lack of access to diligence materials, shorter timelines and limited assistance with regulatory filings absent target board co-operation.

The timing is key – shareholder availability needs to be considered as well as whether the bid is likely to be perceived as opportunistic.

Public statements – including on price, finality, conditions and consideration – need careful consideration as they may limit the bidder’s ability to change tack as the process develops.

The price announced will generally set a floor, in the eyes of the market and under the Takeover Code. Once public, shareholders can be expected to treat the proposal as the starting point for negotiations rather than the end point, even if it represents an increase on private proposals. A bidder may want to declare its proposal “final” at some stage to limit further bumps.

Once a bear hug has been made, subsequent engagements with shareholders and other stakeholders will play out in public, alongside scrutiny of the bidder and its proposal. This may well unsettle the target workforce or even draw in another bidder.

A fixed cash price provides target shareholders with a settled amount to assess. In contrast, the value of listed share consideration is vulnerable to movements in the bidder’s share price and, potentially, fluctuating exchange ratios up to completion. In the current period of macro volatility, this can make it challenging for the target board and shareholders to assess an offer’s value. Share consideration also requires target shareholders to evaluate the equity story of the combined group.

The size of the cash offers announced in 2026 demonstrates that committed debt and equity financing remains available for high-quality assets – Zurich’s $5bn equity raising to partly finance its acquisition of Beazley and Nuveen’s £3.1bn committed debt facility to acquire Schroders are good examples.

For sponsor-backed public-to-private deals,  there has been plenty of dry powder, investment from LPs and/or syndication, consortium structures, and equity cheques reduced by stub equity rollover. 

The Takeover Code imposes additional constraints on share bids – including in relation to profit forecasts – which add complexity and can put bidders off.

Procedurally, there are limited constraints on putting cash into the hands of target shareholders, whereas applicable securities law will impose obligations for share offers.

In addition, investment mandates, index eligibility, custody arrangements, tax treatment and overseas securities law issues can make bidder equity unattractive or impracticable for some shareholders, or they may be restricted from receiving or retaining bidder shares where they are listed overseas. The current level of interest from international strategics has brought this issue into focus.

Prologis’ offer for SEGRO was initially proposed as a share offer and, alongside valuation, the attractiveness of an all-US paper offer was questioned in the market. A 25% cash “sweetener” was subsequently introduced as well as a commitment to establish a secondary listing of Prologis shares on the London Stock Exchange.

An FSP allows a board to run a formal, public process. It can broaden the bidder universe and create competitive tension through a structured comparison of proposals. Checkit commenced an FSP after receiving six unsolicited expressions of interest from credible international parties.

The Panel will normally grant certain Code dispensations. Participating potential offerors may remain unnamed and outside the 28-day PUSU timetable while they remain in the process.

What are the trade-offs?

• Market perception of FSPs: announcing an FSP publicly signals that the company is available for sale and can be perceived as reflecting strategic or financial pressure, even where the process is launched proactively.
• Management distraction: bidder engagement, management presentations and due diligence can place significant demands on management and the board.
• Execution risk: an FSP is often a prolonged public process without necessarily producing an acceptable proposal or firm offer.

A PSP allows a board to engage confidentially with a restricted group of potential offerors and test value and deliverability without immediately commencing an offer period. It can be particularly effective where credible bidders are identified.

Senior’s PSP illustrates the potential benefit: following an unsolicited approach, the board initiated discussions with a limited number of third parties, creating competitive tension and securing a recommended offer.

What are the trade-offs?

• A narrower bidder universe: targeted outreach may not identify an unknown buyer willing to offer superior terms.
• Fewer Code dispensations: a PSP may allow participants to remain unnamed, but does not provide the full package of FSP dispensations, including blanket relief from the PUSU regime.
• Public dynamics: an announced PSP becomes a public search. Any potential offeror specifically identified ordinarily needs to be named and become subject to the PUSU deadline, although other participants may remain confidential.

A strategic review allows a board to assess a potential sale alongside other strategic alternatives and may ultimately lead to an FSP, a non-Code transaction or no transaction. It offers flexibility but can be resource-intensive and attracts shareholder scrutiny if it does not produce a transaction or identify a clear route to value.

A board may also invite approaches publicly without commencing an FSP. Any potential offeror specifically identified will ordinarily become subject to the 28-day PUSU timetable, increasing the pressure to determine quickly whether a firm offer is achievable.