UK Public M&A Review Q3 2024
10 October 2024
Welcome to our review of the UK public M&A market for the third quarter of 2024.
A link to download the full review can be found at the bottom of the page.
Overview
Political uncertainty leads to a quieter quarter
Following a flurry of activity in Q2, the late Summer months were quieter for UK Public M&A, with fewer possible and firm offers announced in Q3 than the preceding quarters. We believe this reflects the uncertainty surrounding the UK government's October Budget, along with certain ongoing geopolitical headwinds, most notably the hotly-contested US election. Whilst strategic bidders continued to dominate across a range of industries, private equity interest was still evident, with the largest offer announced in the quarter – the £5.4bn bid for Hargreaves Lansdown plc – being made by a private equity consortium of CVC, Nordic Capital and the Abu Dhabi Investment Authority.
Early use of private sale process dispensations
We continue to see a trend towards target-led strategic reviews and sale processes, as UK-listed companies continue to suffer from relatively low valuations. Helpful amendments, which were made to the Panel's Practice Statement 31 in April of this year, whereby targets undertaking a private sale process are no longer required to name parties with which they are in talks in the event of a leak, have made such processes significantly more attractive to both targets and bidders. Bidders can now benefit from both anonymity and the additional time available to make an offer, as the put-up or shut-up deadline does not start until a bidder has been identified. We expect to see more of these private sale processes whilst UK markets continue to be undervalued.
Syndication of financing commitments
In recent years, with traditional banks constrained, bidders have had to find alternative and innovative ways to finance take-privates. As part of this, we have observed a growing trend for financing syndication to take place during the early stages of a transaction, either prior to a Rule 2.7 announcement, or between a Rule 2.7 announcement and funding. This inverts the old model, where banks arranged significant debt packages and then took them out in the capital markets. A current example of this is the consortium bid for Hargreaves Lansdown plc, where Ashurst is advising Goldman Sachs, as financial adviser to the consortium.
Syndication tends to be more prevalent in large-cap transactions, where lead financing parties are seeking to reduce on-risk commitments at the earliest possible opportunity. Previous reluctance to syndicate early was primarily driven by the various Code challenges this presents, including: issues around capacity given the restrictions applied by the "Rule of Six" pre announcement; Rules 16 (no special deals) and 20.1 (equality of information), where potential syndicatees (and their concert parties) may hold or be capable of acquiring shares; and challenges from a cash confirmation perspective.
As readers will be aware, it is critical that lead financing parties who are providing funding at the point of the Rule 2.7 announcement are fully committed at that point, regardless of any syndication that may occur later. We therefore recommend early discussions and engagement by bidder-side advisers in order to understand any proposed syndication strategy and when this is expected to take place.
Mandates
In the last quarter, Ashurst's UK public M&A mandates included advising:
- Gran Tierra on its recommended offer for i3 Energy plc;
- Tritax Eurobox on the £552m offer by SEGRO plc;
- Eastdil on the £673.5m takeover of Balanced Commercial Property Trust Limited by Starwood Capital Group;
- Goldman Sachs on the £5.4bn takeover of Hargreaves Lansdown plc by a consortium comprised of CVC, Nordic Capital and ADIA;
- Morgan Stanley on the £1.2bn takeover of Ascential plc by Informa plc;
- Nomura on the £3.3bn takeover of Britvic plc by Carlsberg A/S; and
- J.P. Morgan Securities on the £2.1bn takeover of Keywords Studios Plc by EQT Group.
