# This is getting silly: why the bids for UK companies keep coming

_In the middle of the August lull, bids for UK-listed companies keep coming and the premia keep getting bigger. The explanation is structural, two decades in the making, and almost nobody in government appears to have noticed._

Neil Woodford · 10 August 2026 · 5 min read

![Easyjet aircraft wing at sunset](https://cdn.sanity.io/images/v3acfbvo/production/77aadc9ae15c3e0aa590b6c269b9a9a28da1367b-2736x1824.jpg?w=1600&fit=max&auto=format)

---

We are in the middle of August, a period normally associated with a lull in stock market activity. Nobody seems to have told the bidders. 

This week, [EasyJet and Segro](https://www.thetimes.com/business/companies-markets/article/segro-easyjet-london-stock-exchange-floats-nfp0w2nm5), both once FTSE 100 companies, agreed to be taken over. Apollo, the US private equity business, has won the EasyJet contest, and Prologis, the US logistics company, has taken Segro. 

If that were not enough, the midcap engineering business Bodycote received competing bids from two rival private equity firms on the same day – CVC and Veritas – valuing the company at £1.6bn excluding debt, a 23% premium to its prevailing price. Bodycote had previously rejected a slightly lower offer from Apollo earlier in the year. 

_[Embedded media](https://www.ft.com/content/258c5cba-e65a-4990-82b1-3c5e7fc2bb10?syn-25a6b1a6=1)_

And all of this comes just over a week after DCC agreed to recommend a £5.75bn takeover bid from KKR and Energy Capital Partners.

![UK companies bid for in 2026](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chart-uk-bids-2026-aug26-3f60a6ca0256-light.png)

_The average premium across these bids is 48%, getting on for twice the traditional premium for control. The table pre-dates the competing CVC and Veritas approaches for Bodycote, which valued the company at £1.6bn excluding debt._

The table above summarises the bids seen so far this year, and it excludes the latest approaches for Bodycote. The total value of all bids in 2026 is approaching £70bn, and the average premium is 48%, getting on for twice the traditional premium for control. _(Neil in the margin: Acquirers normally pay above the market price to persuade shareholders to sell and to secure outright control — historically around 25–30%. A 48% average premium signals just how far below fair value buyers think these companies trade.)_

Set against this, IPOs are as rare as hens' teeth in London these days. The last big-ticket London IPO was Deliveroo in 2021, and Deliveroo was bought by DoorDash last year. This year there have been 27x more bids than IPOs in cash terms and, when the £35bn of share buybacks completed so far in 2026 is added in, the numbers are even more frightening.  _(Neil in the margin: Initial public offerings — companies floating new shares on the market. They are the market's way of replenishing itself; without them the pool of listed stocks only shrinks as takeovers remove names.)_

The rate of shrinkage of the London equity market is accelerating, worryingly.

## AstraZeneca rumours

Then there is AstraZeneca. A reasonably authoritative article in the FT last week suggested that the UK's second largest listed company, and arguably its most successful over the last decade, is in talks to merge with the US pharmaceutical company Bristol Myers Squibb to create a $400bn giant. 

_[Embedded media](https://www.ft.com/content/e9027253-e13c-460a-a4b1-f9047e5a6ca7?syn-25a6b1a6=1)_

If such a transaction happened, the listing and centre of gravity of the combined entity would inevitably shift to the US, depriving the UK of one of its most outstanding businesses and, in time, leading to less investment in its UK research infrastructure. 

I can't help thinking that this potential transaction is in part the product of the company's judgement that its stock market rating is being held back by its primary listing in the UK. 

Indeed, Bloomberg highlighted this week that the stock trades on less than 15x consensus earnings for next year, well below its 18x average of the last decade. _(Neil in the margin: The price-to-earnings multiple: share price divided by forecast profit per share. A lower multiple than peers means investors will pay less for each pound of earnings — often a sign of a cheaper, out-of-favour listing.)_

## The long view

At the start of the 20th century, the UK equity market was the largest in the world and accounted for 24% of the global index. Those days are long gone, but as recently as 1989, the UK accounted for 15% of the global index and was the second-largest market in the world after the US. 

Today, at $4trn, the UK sits in a lowly ninth or tenth position, behind the NYSE and NASDAQ, Shanghai, Tokyo, Euronext, Hong Kong, Shenzhen, India and Canada, and accounts for somewhere between 2% and 3% of the global index. 

Some of that relative decline was to be expected given the emergence of the Chinese and Indian economies over the last thirty years, but the UK's dramatic decline relative to, for example, Canada and Japan is much harder to explain.

The number of companies listed in London tells the same story. After the deregulation reforms of the 1980s, it reached a peak of 2,700 in 1996. Since then, a relentless decline has set in, and today there are only about 1,500 actively traded stocks listed in London.

![The incredible shrinking stock market](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chart-lse-listed-companies-aug26-3b3806b75489-light.png)

_After the deregulation reforms of the 1980s the listed count peaked at 2,700 in 1996. By May 2026 there were about 1,530 companies listed in London – the market has more than halved in a generation._

This data says nothing about the quality of the companies listed in London, nor about their valuation, but it does indicate that there is a problem. Where once the equity industry in the City was vibrant and active, fulfilling its fundamental and critical roles for the UK economy, it is now shrunken, almost vestigial. 

Young, growing UK companies no longer see the market as a viable or attractive place to list, and capital-raising activity is barely traceable in the small- and midcap areas of the market where you would expect it to be most active.

## Why the bids keep coming

Regular readers may recall that I have been writing about this for years, but the simple answer is that there is structural undervaluation of UK equities relative to the peer group, to history and to UK corporate returns on capital. UK large caps still trade at a valuation discount of roughly 40% to their US counterparts. That is why buyers can pay a 48% premium and still believe, with some justification, that they are acquiring high-quality assets below intrinsic value.

_[Watch: London isn't dying – it's on sale — London Isn't Dying — It's On Sale. Here's Where To Look](https://www.noisecancelling.co/the-show)_

This undervaluation is no accident. It is the product of two decades of self-harm and neglect inflicted on the UK equity market by successive governments and regulators, and of the retreat of the UK's own institutional investors from their home market. 

I wrote about the mechanics of that retreat in [_The slow death of the UK equity market_](https://noisecancelling.co/read/the-slow-death-of-the-uk-equity-market) – FRS17 drove defined-benefit pension funds out of UK equities, and MIFID 2 dismantled the broking infrastructure that small and midcap companies relied on. The numbers bear repeating. According to New Financial, UK pension funds have cut their allocation to UK equities from around half of their assets 25 years ago to barely 4% today, and the share of the UK market owned by UK pension funds and insurance companies has fallen from 39% in 2000 to just 4%. The natural domestic demand for UK equities has simply been switched off. _(Neil in the margin: An accounting standard that forced companies to show pension surpluses and deficits directly on their balance sheets. It made volatile equities look risky to sponsors, pushing final-salary schemes en masse into bonds and out of shares.)_ _(Neil in the margin: A 2018 EU rule forcing fund managers to pay separately for investment research rather than bundling it with trading. Budgets collapsed, so analyst coverage of small and midcap firms — the oxygen of those markets — largely dried up.)_

_Related:_ [The slow death of the UK equity market](https://www.noisecancelling.co/read/the-slow-death-of-the-uk-equity-market) — Foreign bidders are picking off UK-listed companies at a decade-high pace, drawn by a valuation discount manufactured by FRS17 and MIFID 2. The consequences for the UK economy are more serious than policymakers seem to grasp.

None of this is contradicted by the FTSE 100 moving above 10,000 for the first time this year. An index can make new highs and still trade at a large discount to its peers, still shed listings, and still watch its constituents carried out of the market at close to 50% premia. The index level measures price; it does not measure health.

## Where this ends

As long as that structural undervaluation persists – whether in airlines, financials, property, insurance, engineering, food service or healthcare – the bids will keep coming, and the stock market will keep shrinking. 

In many ways the destiny of the UK market is ultimately in the hands of UK investors. If they carry on ignoring the valuation opportunity in their home equity market, corporate and private equity buyers will just keep on acquiring, taking advantage of a combination of ignorance, complacency and institutional neglect.

Which brings me to the government. These days more than usual I find myself wondering whether politicians understand anything about how wealth is created in the UK. 

Pat McFadden's words to Peter Mandelson come to mind: 'Every meeting I have is "who can we tax in order to pay benefits to others". They're asking the wrong questions.' 

My suggestion to the new Chancellor of the Exchequer would be to take note, because this matters, and to spend some time thinking about what the government might do to help the UK equity market thrive and prosper again, instead of firing off op-eds in the Telegraph offering hope or admonishing food retailers for mythical price gouging. 

He could start by getting rid of stamp duty, which at 0.5% on all purchases is far higher than that levied on trades in competing markets and compares very unfavourably with the US, Canada and Japan, where there is no stamp duty at all.

Is there anybody out there that cares, or even understands the ramifications of what is going on? I live in hope.

![Figure](https://cdn.sanity.io/images/v3acfbvo/production/77aadc9ae15c3e0aa590b6c269b9a9a28da1367b-2736x1824.jpg?w=1600&fit=max&auto=format)