Daniel Black
Hello,
The fresh energy and optimism that comes at the start of a new year didn’t last long for the UK economy. At time of writing, the pound had reached a 14-month low against the dollar against the background of an escalating sell-off of UK bonds.
Still, there’s plenty of deal news and rumors to distract us from the market turmoil, including:
- CVC weighing up a takeover bid for ITV
- Rokos Capital’s top earner taking home £110m
- Brevan Howard cutting partner pay by 48%
Enjoy the read, and do connect with me on LinkedIn if you want to discuss M&A or anything else besides.
Deal Tracker
Our weekly roundup of all the confirmed M&A deals in the UK.
The Rumor Mill
- The UK competition regulator signals a potential approval for Synopsys’s £28.5bn purchase of Ansys if business unit sales address antitrust concerns
- IBM’s £5.2bn acquisition of HashiCorp is under review by the UK’s antitrust regulator
- Apollo and BC Partners are to acquire GFL’s environmental services business in a £4.5bn deal
- Billionaire Investor Leon Black is in talks to anchor a bid for Britain’s Telegraph newspaper
- Shell’s efforts to sell stake in Rosneft co-owned PCK Schwedt oil refinery refinery in Germany suffer a fresh setback
- Prax and Shell call off deal on stake in PCK Schwedt oil refinery
- Thames Water sets February 10th as a deadline for new investor bids as it seeks urgent equity injections to boost its finances
- News Corp sells Australian pay-TV group Foxtel to streamer DAZN for £1.7bn
- Aviva, L&G, and Lloyds are leading a surge in the UK rental market investments, with £1.5bn in single-family rental deals by September 2024, tripling 2021-22 levels
- GSK nears £0.8bn deal to buy IDRx, a US biotech developing drug for rare tumour
- Segantii founder Simon Sadler, who’s been charged with insider dealing by Hong Kong authorities, looks to sell Blackpool FC
- Tire maker Goodyear is to sell Dunlop brand to Japan’s Sumitomo Rubber for £571m
- Canyon Bridge looks to sell Chipmaker Imagination Technologies for more than £550m
- JPMorgan sounds out investors for £300m Everton FC stadium financing
- Fujitsu wrote down £78.6m in goodwill from its UK business following the Post Office Horizon scandal, reducing its European goodwill from £149.7m to £40.3m
- Ratcliffe’s Ineos invests £81.5m in Manchester United
- Victoria Property makes a possible offer of £32.5m for Ground Rents Income Fund
- Tortoise Media records almost £3mn loss ahead of its Observer newspaper takeover
- Brookfield delays sale of London’s Citypoint office tower after bids fall below £400m significantly short of its £500m target
- Two British investment trusts run by Janus Henderson reject Saba Capital’s proposal to replace their entire boards, arguing it would hand control to the US activist investor
- Diageo spirits group explores a sale of Ciroc Vodka, a brand once backed by music mogul Sean “Diddy” Combs
- Hyve aims to double in size as business conferences boom, by acquiring rival businesses in the corporate events market
- FirstGroup plans to add bus and open access rail routes amid Labour nationalisation
- CVC looks for partners for potential ITV takeover
- Assa Abloy is set to acquire 3millID and Third Millennium in the US and UK
- TransUnion is to acquire credit prequalification platform Monevo from Quint
- Commercial insurer FM agrees to acquire Velocity Speciality Insurance Company
- Permira Funds is set to buy a strategic majority stake in Westbridge from Genui
- Investindustrial is to buy Italy’s cosmetics packaging biz Eurovetrocap
- Ambassador Cruise Line and CFC agree to merge.
Salaries and bonuses
- Centerview Partners cuts London banker pay to £260k per head
- Brevan Howard partner pay drops 48% to £77m as profit slips
- Odey AM partners’ pay falls to £49k as operations wound down after sexual assault claims
- Rokos Capital Management’s top earner pay surges more than 300% to £110m
Job moves
- Warren Stephens’ UK ambassador role triggers succession at family-owned investment bank
- William Blair names Licudi as head of European investment banking
- JPMorgan hires Barclays’ Jempson for corporate broking in latest London recruit
- Jefferies promotes five investment bankers to managing director in European dealmaking.
- Latham & Watkins hires Goodwin finance partner in its debt finance team in London
- KKR hires Paul Hastings London finance partner
- Aviva reveals job cuts plan after agreeing to buy DLG for £3.7bn, aiming to save £125m annually in pre-tax costs.
- A record 546 senior lawyers switched firms in London last year, driven by the rise of US law firms and intensifying pay wars.
Market Trends
Inflation and interest rates
Global inflation is easing from recent multi-decade highs, prompting central banks, including the Bank of England, to adopt more accommodating monetary policies in 2025.
This promises to bolster economic growth, with analysts forecasting a 2% GDP growth for the UK this year. The FT’s inflation and interest rates tracker provides a comprehensive visualisation of economic trends.
Aggregated inflation vs. interest rates
Global interest rates
Record amount invested in UK stocks
According to Calastone in 2024, UK investors added a record £27.2bn to equities, driven by surging inflows into passive index-tracking funds. This comfortably beats the previous record of £19.8 billion pounds set in 2021.
What are the prospects for UK equities and M&A?
Fund managers are increasingly bullish on UK equities, citing attractive valuations and macroeconomic tailwinds. Sectors such as housebuilding, supported by affordable mortgages and resilient demand, stand out as potential winners. Morningstar highlights UK homebuilders like Barratt and Persimmon, forecasting potential stock price increases of up to 50%.
The report also predicts it could be a busy 2025 for M&A, with struggling companies like Burberry and Dr Martens a potential target for bargain hunters.
Reeves Under Pressure With UK Debt Costs
While falling inflation and interest rates have brightened the economic outlook, the UK faces fiscal headwinds as long-term borrowing costs near levels not seen since 1998. Chancellor Rachel Reeves is under pressure to manage a soaring debt load. Rising gilt yield, driven by aggressive borrowing plans outlined in October’s budget, highlight the delicate balance between fiscal sustainability and economic growth, posing risk to market sentiment and on UK equities.
The 10-year gilt yield has surged to its highest level since 2008, and 30-year yields are at a 26-year peak. Exacerbating the pressure, the pound has also tumbled 1.2% against the US dollar, hitting its weakest level since last April.
Fundraising
IPOs
- Shawbrook Owners eye London IPO in First Half of 2025
- Shein, a fast fashion giant, which may pursue a major London IPO this year, faces scrutiny alongside its rival Temu. UK MP Liam Byrne criticises Shein for failing to provide credible evidence regarding its supply chain integrity.
- Activist investor Palliser Capital is pushing Rio Tinto to conduct a thorough review of abandoning its primary London listing.
