UK Stock Market Takeover Targets For 2024

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The stock market loves a good takeover target and story and nothing quite gets investors going like bid speculation. So here I take a look at the biggest and best takeovers of 2023 and what stocks may be potentially bid for in 2024.

At this time in the economic calendar, it’s customary to look back over the year that’s been and gone, and forward to the New Year to come, and who are we to break with tradition?

Several key themes drove 2023, the battle with inflation and the higher interest rates that it caused, house prices that peaked and in some cases went into reverse. We also saw the return of cash deposits and government bonds as viable investment choices, thanks to those higher interest rates.

A generative rally

Probably the biggest story of 2023 was the rise of AI, or should that be the rise of stocks linked to Artificial Intelligence?

None more so than graphics chip maker Nvidia (NVDA) which is on course to finish 2023 with a +240.0% gain.

Of course, there was that recent wobble in the AI story, when Sam Altman was briefly fired, and then reinstated as the CEO of Chat GPT owners, OpenAI, but we won’t dwell on that today.

M&A is subdued but ongoing

Despite the headlines about a lack of deals and lower earnings in the corporate finance departments of investment banks and brokerages, there was a  decent amount of M&A activity in 2023.

Though it’s true to say that there weren’t that many mega-deals, there were plenty of smaller to mid-size transactions.

And in the summer US oil giants Chevron (CVX) and Exxon (XOM) flexed their chequebooks to make the multi-billion dollar purchases of Hess and Pioneer.

M&A activity wasn’t confined to the US; indeed there was plenty to keep the UK’s corporate finance teams busy, as 43 bids or other deals were in the mix by the end of October this year.

Those deals were worth a not inconsiderable £26.30 billion, though by far the biggest of them is the proposed merger of packaging group Smurfit Kappa with its rival Westrock, which accounts for approximately one-third of the value of those 43 deals.

Acquisition analysis

Here’s a breakdown of the major takeover deals in the UK in 2023

Company Date Bid price (p) Premium (%) Value (£m) Terms Bidder Sector
Smurfit Kappa 12.09.23 one Smurfit Westrock na 9,333.33 Shares Smurfit Westrock Industrial
Dechra Pharmaceuticals 13.04.23 3875 44 4,460.00 Cash EQT Medical
Network International 13.04.23 400 c.40 2,200.00 Cash Brookfield Financial
Kape Technologies 13.02.23 285 10 1,250.00 Cash Unikmind TMT
EMIS 17.06.23 1925 49 1,240.00 Cash United Health Medical
Ergomed 04.09.23 1350 28 703.00 Cash Permira Medical
Restaurant Group 12.10.23 65 34 506.00 Cash Apollo Consumer
Lookers 27.07.23 130 8 504.00 Cash Alpha Auto Consumer
Industrials REIT 03.04.23 168 42.4 499.00 Cash Sussex Bidco Financial
Civitas Social Housing 09.05.23 80 44.4 485.00 Cash CKA Financial
Gresham House 17.07.23 1105 63 470.00 Cash Searchlight Financial
Pendragon 20.09.23 32 13 447.00 Cash Autonation Consumer
Numis Corp 28.04.23 350 72 410.00 Cash Deutsche Bank Financial
Round Hill Music Fund 08.09.23 $1.15 67.3 390.00 Cash Concord Financial
DWF Group 10.07.23 100 53 342.00 Cash Inflexion Services
Hyve Group 21.02.23 105 24 306.00 Cash Providence Services
DX Group 11.09.23 48 12 290.00 Cash HIG European Capital Services
Dignity 04.01.23 550 29 281.00 Cash Yellow (bidco) Services
Medica 24.04.23 212 32 269.00 Cash Moonlight Bidco TMT/Medical
Sureserve 21.04.23 125 39 214.00 Cash Cap10 Bidco Services
Instem 30.08.23 833 41 203.00 Cash Archimed TMT/Medical
Kin & Carta 18.10.23 110 41 203.00 Cash Apax Partners TMT

Source: Shore Capital

Bid premiums for cheap companies

According to data from brokers Shore Capital, the mean bid premium for UK takeover deals in 2023 was +60.0%. The median, or midpoint, is found at 40.0%.

The broker makes the very valid point that UK equity indices have been in the doldrums for years when compared to their European and US peers, many of which have made (high?) double-digit gains in 2023 alone.

UK companies are cheap, particularly to those predators who have enjoyed a rising share price or whose balance sheets are flush with cash such as PE funds. At the time of writing the S&P 500 is up by more than + 91.0% in the last five years, and by +157.0% over the last decade.

With that in mind and with no obvious sign of a renaissance in UK equity indices on the horizon, it makes sense to think about who could be in the firing line in 2024.

Most active takeover sectors

According to Shore Capital, since 2017 the sectors which have seen the most M&A activity by value include Other Financials (£30.43 billion) Food and Beverage (£22.80 billion) and Electronics Equipment ((£22.40Billion).

Selected Merger and acquisition activity in UK markets (2017 to end Sept 2023)

Sector Deal Value (£m) Median premium (%)
Other Financials 30,431 25.25
Food & Beverage 22,806 41.00
Electronics Equipment 22,403 43.00
Mining & Minerals 18,809 34.10
Software 17,781 38.90
Real Estate & Construction 14,742 40.35
Consumer & Retail 14,786 30.50
Other Services 13,262 39.80
Investment & Investment Management 11,825 27.00
Aviation 12,343 53.00
Online Gambling & Betting 11,890 22.05
Pharmaceutical 16,169 41.00
Financial Institutions 11,530 51.00
Automotive 10,698 32.45
REIT 11,811 28.63
Entertainment & Broadcasting 10,141 40.00
FinTech 9,806 24.30
Information Technology 9,770 33.70
Utilities 8,658 33.10

Source: Shore Capital / PTM

Potential takeover targets in 2024

What makes for an attractive takeover target in 2024? Well, many of the bid targets in 2023 were seen as being undervalued and having strong brands, or, intellectual property. Which offered growth opportunities, given access to more capital, or a larger parent.

Looking down the list of FTSE 250 stocks and scanning for those names with low PE ratios we find house builders Redrow and Crest Nicholson:

Redrow & Crest Nicholson

  • Redrow PEs of 6.57 Crest Nicholson PE 4.13 times
  • The price-to-book ratios of the two businesses are 0.97 and 0.62. They have dividend yields of 5.0% and 7.90%.
  • Crest Nicholson has a market cap of just £550.00 million a fraction of those of larger rivals like Persimmon or Taylor Wimpey.

Ibstock Johnson

Building Materials Group Ibstock Johnson is another stock that catches the eye:

  • Ibstock Johnson’s PE of 8.55, it has a dividend yield a smidgen over 6.0%.
  • It trades on a price-to-book ratio of 1.38 times and just 1.12 times sales.

Jupiter Fund Management

Elsewhere Jupiter Fund Management looks interesting:

  • Jupiter Fund Management market cap of £480.0 million
  • A PE of 8.16 and a price-to-book ratio of just 0.57 times,
  • A possible target for UK or European rivals, in a sector where economies of scale are crucial.


Speciality materials group Vesuvius is another stock of interest:

  • Vesuvius: Market cap of £1.27 billion, PE of 7.80 times
  • Price to book 1.0,  ROI  43%.

Vodafone & BT

In the FTSE 100 Vodafone and BT, both look cheap with lowly PEs, price to book and price-to-sales numbers.


Mining and commodities giant Glencore is another stock that stands out in the top 100. Though with a market cap of £57.0 billion, it won’t be on too many shopping lists.

Nevertheless, it has a price-to-book ratio of 1.50 times and a PE of 7.80, well below that of Rio Tinto and Anglo-American.

Both of whom also have far higher profit margins, and that suggests that there is hidden value, if not gold, in them thar hills.

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