The UK public markets have experienced a surge in takeover activity during 2026, with acquisitions exceeding $100 billion so far this year, according to data from AJ Bell. The wave of deals, driven largely by foreign and private equity buyers, has encompassed a wide range of companies, from century-old names such as Segro, Tate & Lyle, and Intertek to more recent entrants like easyJet and DCC. In the first week of September alone, three additional deals totaling around £3 billion were agreed for Bodycote, Gamma Communications, and Capricorn Energy.

The uptick in takeovers underscores ongoing challenges faced by the London Stock Exchange, where UK-listed companies continue to trade at significant discounts compared to their international counterparts despite the market reaching near record highs. Patrick Sarch, head of UK public M&A at law firm White and Case, characterised this trend as a sign of persistent undervaluation but noted that inbound foreign investment remains a positive indicator of London’s open economy. “An absence of international demand would be far worse,” he commented, while acknowledging concerns about the implications of sustained foreign ownership for the future of the UK public market.

Several structural issues have contributed to the discounting of UK shares. These include five consecutive years of outflows from UK-focused funds, the shrinking role of the London market—now representing just 3.5 percent of the MSCI World Index—and the internationalisation of company boards and investors less anchored to London listings. Moreover, stronger financial opportunities elsewhere, particularly in the United States despite risks related to an AI-driven market bubble, make UK equities comparatively less attractive.

A striking example of the market’s mispricing was KKR’s £4.2 billion takeover of engineer Spectris last year, which took place at a premium of nearly 105 percent. Similarly, the recent £1.64 billion all-cash acquisition of aerospace heat-treatment specialist Bodycote by US private equity firm Veritas came at a premium of 25.3 percent. The deal price of 940 pence per share approaches Bodycote’s peak share price from August 2021, reflecting a competitive bidding environment. The company’s board had previously indicated a price range around 885 pence plus dividend before a potential suitor, Apollo, withdrew from talks. Market speculation suggests that rival bidder CVC may still enter the fray, with Bodycote’s shares rising above the offer price in response.

Despite these headline-grabbing buyouts, market participants acknowledge deeper issues remain unresolved. One suggested reform to boost liquidity is the removal of the 0.5 percent stamp duty on share transactions; however, both major political parties have hesitated to endorse the estimated £3 billion cost. Another fundamental concern is the limited pipeline of new initial public offerings to replace firms being taken private.

Nonetheless, some companies are seeking alternatives to becoming takeover targets by pursuing mergers with fellow UK-listed firms. Such consolidations could create more robust entities capable of delivering greater operational efficiencies and attracting investment, potentially shifting the balance of power toward domestic corporate predators rather than external buyers.

In this evolving market environment, the London Stock Exchange continues to provide a platform for significant corporate change, even as questions remain about the long-term attractiveness and valuation of UK public equities.