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This Market Tracker trend report provides in-depth analysis of the 46 firm offers, 47 possible offers and 17 formal sale processes and/or strategic reviews, which were announced by Main Market and AIM companies subject to the Takeover Code (the Code) in 2022. It includes insight into public M&A trends and what we and our contributors expect to see in 2023 and beyond.

Topics covered

• outlook for 2023
• deal value and volume
• deal structure
• hostile, competing and mandatory offers
• P2P transactions
• UK and overseas bidder activity
• industry focus
• shareholder engagement
• legal and regulatory developments

The report includes analysis of high-profile transactions, including the £9.9bn offer for AVEVA Group by Schneider Electric and the competing offers for M&C Saatchi by AdvancedAdvT and Next Fifteen Communications.

Report highlights

After high levels of activity in 2021, public M&A deal flows returned to more moderate levels in 2022 with 46 firm offers announced (2021: 53 firm offers) with an aggregate deal value of £41.4bn (2021: £65.2bn). There were 13 transactions where the offer price exceeded £1bn, with the largest transaction being the £9.9bn offer for AVEVA Group by its 59% shareholder, Schneider Electric.

There was a reduction in public to private (P2P) activity compared with recent review periods, with 19 (41%) of the 46 firm offers announced in 2022 being P2P transactions (2021: 64%).

The aggregate deal value of P2P transactions was also down with an aggregate deal value of £17.5bn (2021: £41.1bn) and average deal value of £921m (2021: £1.2bn). However, private capital continued to play an active role on the largest transactions with six (46%) of the 13 £1bn plus takeovers announced in 2022 being P2P transactions.

Several offers were made by bidders controlled by individuals or family offices and four consortium bids were announced, with the consortium members being a diverse spectrum of private equity investors, corporates, pension funds and family offices. Overseas bidders were involved in 29 (63%) of the 46 firm offers announced during the period (2021: 70%) with an aggregate deal value of £33.6bn (2021: £60.1bn). This represented 81% of the aggregate deal value in 2022 (2021: 92%).

US bidders were less active than in recent review periods, being involved in 11 firm offers with an aggregate deal value of £7.4bn (2021: 27 firm offers with an aggregate deal value of £51.3bn). This represented 18% of aggregate deal value in 2022 (2021: 79%).

Public M&A activity was spread across a range of industry sectors in 2022 with the most active sectors being Energy & Utilities, Financial Services, Real Estate, Support Services and Technology, Media & Telecommunications. These five sectors collectively accounted for 61% of deal volume in 2022.

Three of the firm offers announced in 2022 were unrecommended from the outset and a further three offers that were initially recommended saw the recommendations withdrawn when higher competing offers emerged. Next Fifteen Communication’s all-share offer for M&C Saatchi was also initially recommended, but the recommendation was withdrawn after a steep decline in Next Fifteen’s share price resulted in the value of its offer reducing significantly.

Four companies received firm offers from competing bidders and a further six companies that were the subject of firm offers in 2022, attracted potential competing offers.

There were several examples of shareholders actively engaging with target companies, including on Schneider’s £9.9bn offer for AVEVA Group and on Capital & Counties Properties £2bn all-share merger with Shaftesbury. This engagement took several different forms, including encouraging companies to pursue merger transactions, questioning the offer price and engaging in bumpitrage to improve offer terms.

Legal and regulatory update

The report considers a number of legal and regulatory developments that took place in H2 2022 (by way of update to our H1 2022 trend report). These include:

• the Takeover Panel (Panel)’s publishing response statement, RS 2022/2, which confirms changes to be made to the presumptions contained in the definition of ‘acting in concert’ in the Code
• the Panel publishing consultation paper, PCP 2022/3, which proposes clarifications on how the offer timetable operates in competitive situations
• the Panel publishing consultation paper, PCP 2022/4, which proposes miscellaneous changes to the Codethe Financial Conduct Authority (FCA) publishing Market Watch 71, which comments on market practice by advisory firms in maintaining insider lists
• the FCA publishing Primary Market Bulletin 42, which considers the relationship between the UK Market Abuse Regulation (UK MAR), the Listing Rules and the National Security and Investment Act 2021 (NSIA)the government blocking three transactions involved Chinese entities under the NSIA
• the government publishing new market guidance in relation to the NSIA
• the Competition and Markets Authority (CMA) blocking a number of deals in H2 2022the first use by the CMA of its phase 2 fast-track mechanism introduced in 2021Market commentary

Expert market insight

The report contains expert commentary from:

• Giles Distin, Lucy Robson and Simon Wood, Addleshaw Goddard
• Simon Allport, Bird & Bird
• James Bole, Rui Huo, Katherine Moir, David Pudge and Dominic Ross, Clifford Chance
• Kate Cooper, Freshfields
• Selina Sagayam, Gibson Dunn
• Tom Brassington, Nicola Evans, John Livesey, Francesca Parker, Patrick Sarch and Daniel Simons, Hogan Lovells
• Leon Ferera, Jones Day
• Iain Fenn, Dan Schuster-Woldan and Nicole Kar, Linklaters
• Philip Broke, Tom Matthews and Sonica Tolani, White & Case