CMA shake-up set to drive resurgence of UK M&A activity
Mergers and acquisitions (M&A) in the UK are expected to strengthen in 2025, aided by the recent shake-up at the competition regulator.
According to a report by consulting firm Bain & Company, over 2024 private equity dealmaking surged nearly three times over in the UK, significantly outpacing global M&A growth.
The report noted that total UK M&A market last year was $133bn, up 38 per cent year-over-year.
The mega deals that drove value included International Paper merger with DS Smith in Q1 for $9.8bn and Carlsberg’s merger with Britvic in Q2 for $5.2bn
However, the outbound strategic deal value declined by 31 per cent year-on-year to $42bn.
Its prediction for this year is that M&A activity is “expected to strengthen further” as UK-listed companies are widely viewed as undervalued, making them attractive takeover targets.
The recent shake-up at the Competition and Market Authority (CMA) may drive this even more.
In late January, it was reported that the government sent a “clear message” to UK regulators after it ousted Marcus Bokkerink from his position as chair of the CMA.
Speaking to CityAM, Alastair Chapman, global head of antitrust at Freshfields stated “in the global race for growth, the UK government does not want the CMA to be an impediment – real or perceived – to value creation.”
He stated that “boards are dusting down some of the transformational deals they had previously put in the ‘too difficult’ box”.
Jacqueline Vallat, partner at law firm CMS told CityAM that she “would be surprised if the combination of a recent shake-up at the CMA, legislative changes and the government’s focus on growth does not lead to a softening of the CMA’s previous approach”.
While Peter Horsley, head of Bain & Company’s M&A practice for EMEA added that “more clarity, and certainty in merger regulation, should be one positive catalyst for dealmaking.”
“Recent comments from the CMA interim chairman around making investigations and processes as simple and rapid as possible, should point to reduced uncertainty and shorter timelines even as traditional merger enforcement constraints remain,” Horsley noted.
Doug Gurr, a former Amazon executive, was chosen to lead the competition watchdog after Bokkerink was shown the exit door. He told the Financial Times that “good decisions, clear decisions, rapid decisions — that’s what you tell us you need and that’s on us to deliver.”
But Chapman added that “we don’t expect to see a wholesale waving through by the CMA of the most challenging transactions.”
“Instead, the government’s focus on its growth agenda could cause the CMA to take a less interventionist approach to ‘edge’ cases, but only if there is a credible story on the benefits to UK plc,” he explained.