Takeovers like Schroders and Tate & Lyle grab the headlines but the far bigger problem for London is that there aren’t enough good companies arriving to replace them, says Henrik Persson There is a familiar account of London’s stock market malaise. UK listed companies are cheap and deeper-pocketed overseas buyers
Henrik Persson
Wednesday 08 July 2026 5:36 am | Updated: Tuesday 07 July 2026 11:53 am
Takeovers like Schroders and Tate & Lyle grab the headlines but the far bigger problem for London is that there aren’t enough good companies arriving to replace them, says Henrik Persson
There is a familiar account of London’s stock market malaise. UK listed companies are cheap and deeper-pocketed overseas buyers have noticed. Each new approach or offer is treated as another chip from the foundations of the market. Beazley and Intertek supply the FTSE 100 quality angle. Schroders and Tate & Lyle bring the historic British names and long listed heritage. JTC and Bodycote (the latter, until Apollo decided to walk away) contribute the archetype: technically serious, internationally useful, and not much discussed outside investment committees.
The story is understandable because takeovers are unusually exciting events. A bid arrives with a splash, perhaps a big payday for investors, and the potential for drama. If the buyer is foreign, or private equity, the symbolism is also readily available. Most recently the story tends also to say that another UK company is in play and another listed name may leave London, and another example can be added to the argument that London is being hollowed out.
The truth, however, is that public companies have always left the market and that is not obviously a defect in public equity. It is instead part of the bargain. A company floats, raises capital, broadens its shareholder base, grows, acquires, distributes cash and, in time, may be acquired itself. In a well-functioning version of that cycle, an exit crystallises value for shareholders who supported the business along the way. It is inherent in being listed that a company is in the shop window and that investors can buy one share or all of the shares. The real test for London is not whether companies leave the market, but whether enough good companies are arriving to replace them.
The market has therefore, happily, always had churn. Our analysis of takeover activity among UK-listed companies since 2010 suggests a less dramatic picture than the mood implies. So far in 2026, we have recorded 16 firm offers for UK-listed companies. A simple annualisation would imply about 42 firm offers for the full year, below each of the previous three years: 60 in 2023, 58 in 2024 and 63 in 2025.
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The value mix also complicates the story. Of the 16 firm offers recorded so far this year, 12 have been for companies valued below £250m. That is 75 per cent of the total, compared with a long-run average of 57 per cent across our dataset. Only three firm offers so far this year have been above £1bn, against 17 in 2024 and 11 in 2025.
The possible offer figures are livelier. We have recorded 28 possible offer situations so far this year. Annualised, that would imply about 74, higher than any full year in our dataset. That probably explains much of the atmosphere. There are approaches, leaks, strategic reviews and bid rumours. Boards are being tested, advisers mobilised, share prices and share registers move. The churn in recent years is just not exceptional.
Possible activity, firm offers and completed takeovers are different things. Public discussion tends to compress them all into one mood of departure and stock market failure.
Boards are not generally looking to exit, and a sense of undervaluation is hardly new. Most management teams believe the market does not give them full credit for the strategy, the pipeline, the cost base or the next turn in the cycle. Nor would many investors want to back a board that thought the market had got everything about the company exactly right. Boards have also been well rehearsed. Years of valuation-discount charts, unsolicited-interest warnings and takeover-defence presentations have left many with a developed sense of what an opportunistic approach might look like. In some sectors, repeated private equity interest has provided the same education by other means.
Read more Tate & Lyle becomes latest market stalwart to quit London Discounts are not imaginary
None of this makes the valuation issue imaginary. UK companies have traded at persistent discounts to international peers, and those discounts do attract bidders. In practice, however, the discount does not operate like a clearance label. It is more often the start of an argument.
Long-only shareholders are more conflicted than the “cheap UK assets” narrative allows. A premium is welcome, perhaps after years of frustration at valuations stubbornly staying flat or illiquidity in the trading of shares. The repeated disappearance of good listed companies is not, however, an unqualified victory for investors whose own proposition depends on finding good listed companies to own. There is an existential discomfort in seeing the financial logic of each transaction while wondering what, exactly, will be left to put in the portfolio and what price they must pay to acquire commensurate risk-reward exposure, or whether their own underlying investors will withdraw capital rather than commit to the next cycle.
That helps explain why possible-offer activity can feel lively while firm-offer numbers remain less remarkable. The bidder sees an attractive entry point. The board sees an undisturbed price that understates the business. Shareholders see a premium, but also the risk of selling one of the better assets in a market already short of them. Bodycote is a useful example: Apollo’s approach fitted the prevailing narrative neatly, but no firm offer followed. It mattered as a signal, not as an exit.
The serious problem is harder to observe because it often consists of things not happening. A public market can absorb companies leaving if good companies arrive behind them. London’s difficulty increasingly looks like a replenishment problem. A takeover announcement is visible, whether or not the deal completes. A company deciding not to list in London is not. A founder choosing another private funding round creates no equivalent market or press event. A board preferring New York, or deciding that public status is not worth the trouble, is noticed only occasionally.
Low valuations do indeed make some listed companies more vulnerable to approaches, but the same low valuations make new listings less attractive. Takeovers remove companies in the ordinary course and offer an important route for investors to realise value after taking risk. If there are too few new companies to replace them, then the listed universe contracts, making the market look less compelling to the next company considering whether to join it.
Many savers will not have strong views on Intertek or Bodycote. Some will not have heard of them. They may still own businesses like them indirectly through pensions, ISAs, tracker funds or institutional savings products. Public markets are partly made up of companies that are not household names but are, in practical terms, household investments.
That is why the shrinkage matters. It is not because every takeover is a wound, or because public ownership should be a life sentence. An exit can be a good outcome for a company, its board and its shareholders. The harder question is why fewer companies seem inclined to begin that public-market journey in London, why the capital behind the market is not doing more to draw them in, and what should be done about it.
Henrik Persson is head of strategic PLC advisory at Cavendish
Read more Tate & Lyle confirms £2.7bn takeover by US rival
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