The Recent Deals Shaping UK M&A

UK M&A recently has been a story of fewer deals but bigger ones. Deal value more than doubled to £124.2 billion in the first half of the year, even as the number of transactions fell. Behind that headline, a few clear trends are shaping the market, and the three deals in this edition capture most of them.

The first is continued consolidation, as buyers pay for scale and the cost savings that come with it, as Santander’s purchase of TSB shows. The second is the pull of cheap valuations. Years of underperformance have left British companies looking like bargains to overseas buyers, and Prologis was willing to pay a 39% premium for SEGRO. Those buyers are also facing tougher negotiations. SEGRO turned down three offers before accepting the fourth, and easyJet sparked a summer bidding war between two American investors. The result is a London market that keeps shrinking, with companies leaving through takeovers faster than new listings arrive to replace them. SEGRO and easyJet are the latest names set to go.

Santander / TSB

Few banks have had a rougher ride than TSB. In 2018, a botched technology upgrade locked thousands of customers out of their own accounts. Eight years later, it has changed hands in a £2.65 billion cash deal, and both sides are calling it a win.

Santander UK completed the purchase from Spain’s Sabadell on 30 April 2026, paying £2.65 billion plus roughly £213 million to reflect growth in TSB’s net assets. It values TSB at about five times its expected 2026 earnings once cost savings are counted and 1.45 times its tangible book value. The deal makes Santander UK the country’s third-largest bank by personal current account balances and fourth in mortgages, serving close to 28 million customers alongside TSB. More customers mean cheaper funding, more lending and more chances to sell extra products to people who already bank with you. Santander expects at least £400 million in annual savings and is targeting a 16% return on tangible equity by 2028. Most of that should come from moving TSB onto Santander’s technology and trimming duplicated back-office work, with the two banks due to merge in the first half of 2027. For Sabadell, the sale made just as much sense. It bought TSB in 2015 and never quite turned it into a star. Selling let it walk away from a UK distraction and return cash to shareholders, at a moment when it was also fending off a takeover approach from BBVA.

Santander UK’s chief executive called it the sector’s largest investment in over 15 years, a sign that size matters more than ever in British banking. Yet bigger banks raise fair questions about competition and customer choice, and for now TSB keeps its own brand. The biggest risk is execution. The £400 million only materialises if the integration goes smoothly, and TSB’s own history is a reminder of how badly that can go wrong.

Prologis / SEGRO

Prologis has agreed to acquire SEGRO in a deal valuing the company at around £13.9 billion. SEGRO is Britain’s biggest listed property company, and Prologis is the world’s biggest warehouse landlord, based in the US. Together, they form a logistics giant. SEGRO shareholders voted in favour of the deal on 28 September, and completion is expected in the first half of 2027, subject to regulatory clearances.

Prologis gets scale where it wants it. Its European footprint grows significantly, and its European land bank grows as well. Land matters because good warehouse sites near cities are relatively scarce and buying them one plot at a time is slow. SEGRO’s existing land and customer relationships give Prologis a shortcut. Prologis gains a ready-made, high-quality portfolio. SEGRO’s shareholders get a stake in a much larger, globally diversified business, plus cash if they want it. SEGRO’s chief executive said both firms share a belief in long-term demand for modern logistics and data centres. The cost savings from combining should come from spreading Prologis’s global operations and financial strength across SEGRO’s assets.

This deal is the latest in a run of prominent departures, with 11 companies valued above £1 billion taken over this year. It is also the fourth listed Real Estate Investment Trust (REIT) to be absorbed into a larger international REIT in recent years. The takeover arguably shows that London undervalues its property companies, which is why foreign buyers can pay a large premium and still get a good deal. The concern is less about any single deal than about London steadily hollowing out.

There are mitigating factors. Prologis has agreed to explore a secondary London listing so UK investors can still hold shares. But a secondary listing is a lot weaker than a primary one: the company is run and valued from the US, and a secondary listing in London does not bring the same trading activity, index weighting or prestige. However, it is not all bad news for the London market as it could make the UK REIT market more dynamic and bring more investment to the UK.

Apollo / easyJet

Although not completed, Apollo’s potential takeover of the budget airline easyJet is one of the most interesting deals of the past quarter. For most of the summer, two large American investors fought over easyJet, with the winner only confirmed at the beginning of August. easyJet’s board accepted a £7.15 per share cash offer, valuing the airline at approximately £5.7 billion.

Castlelake, a US investor that specialises in aviation, was the first to bid. After easyJet rejected its early bids, Castlelake came back multiple times, and the board eventually agreed in principle to an offer of 690p a share. Days later, Apollo came in at 715p. The board switched its support, and on 6 August Castlelake walked away, although it has kept the right to return in certain circumstances. For shareholders, the contest paid off. The final price is an 81% premium to where easyJet traded before takeover talk began.

So why fight over a budget airline? The answer lies mostly in what easyJet owns. It holds valuable landing slots at busy airports including Gatwick, Paris and Geneva, and slots are scarce and almost impossible to buy in bulk. The airline has also trailed Ryanair on profitability for years, which gives a new owner room to add value. Apollo says it will build on the existing strategy rather than replace it, particularly by growing ancillary revenue (the money made from bags, seats and extras) and loyalty schemes. The deal structure is also unusual. UK and EU rules limit foreign control of airlines, so Apollo will own no more than 49.9%. easyJet founder Sir Stelios Haji-Ioannou, whose family holds about 15%, is backing the deal and rolling his entire stake into the new private company rather than taking cash.

However, this deal still has hurdles to clear. Shareholders vote in November, with completion expected by the end of Q1 2027. The more prominent risk is regulatory: as the EU reviews its airline ownership rules, stricter rules could unpick Apollo’s carefully built structure. Also, Apollo has not said how much debt it plans to put on easyJet. Private equity leverage works well in a steady business, but aviation is rarely steady for long. Overall, if it completes, easyJet becomes another household name to leave the London market.

Outlook

Together, these three deals capture the state of UK M&A this year, with bigger deals, foreign buyers willing to pay up, and shareholders holding out for more. For sellers, these premiums are welcome. For London, each takeover leaves the market a little smaller. We feel the outlook depends on a few things. Rising interest rates will make deals more expensive to finance, particularly for private equity, as the Bank of England edges towards a hike. The valuation gap with the US, however, shows little sign of closing, so UK companies will remain attractive to foreign buyers. Regulators may also take a harder line on foreign control of strategic assets, as the EU’s airline review suggests. Overall, we expect activity to slow slightly but stay strong into 2027, with strategic buyers doing more of the work than private equity.