Tina Lee, CEO of Citi UK, told CNBC that M&A activity in the UK is booming with large companies simplifying their operations and overseas buyers targeting cash-generating UK assets.
Speaking on CNBC’s Squawk Box Europe in Canary Wharf on Thursday, Mr Lee said M&A was “on the rise”, pointing to a continued push by major companies to rationalize their portfolios and focus on their core businesses.
Mr Lee referred to the trend of larger companies streamlining their business models, saying it was “driven by the ongoing theme around simplification of UK PLCs”.
He highlighted McCormick’s deal with Unilever’s food business and Diageo’s sale of the Indian cricket team as examples of companies increasing their focus on core competencies.
Mr Lee added that overseas investment in the UK was also strong, with 28 deals announced so far this year, particularly targeting companies with solid cash flows and international visibility. At the same time, he added that British companies continue to invest overseas, noting Rosebank’s acquisition of MW Components earlier this year.
“All of this is focused on large-cap stocks focused on core competencies,” she added.
Mr Lee said M&A was currently the main driver of momentum in the UK capital markets, and the strength of deal closings was in contrast to the quiet IPO market.
He said the main factor was the valuation gap between the UK and US, adding that well-established British companies with strong cash generation and resilient business models remained highly attractive to overseas buyers.
What’s driving UK dealmaking?
According to PwC data, the number of deals in the UK market fell by around 12% last year, but the total value of deals rose by around 12% as the average deal size jumped by 30%.
This suggests that strategic buyers and private equity firms are increasingly targeting high-quality assets rather than chasing volume.
Key deals include the £15.2bn cross-border merger between Anglo American and Teck Resources, the £3.7bn takeover of Aviva by insurer Direct Line, and the £3.9bn takeover of Deliveroo by DoorDash.
The UK IPO market has remained relatively sluggish in recent years. PwC said 2025 was the busiest year for IPO activity in London since 2021, but trading volumes remained well below last year’s levels.
According to EY data, 23 companies listed on the London Stock Exchange in 2025, nine of which were listed on the main market and 14 with IPOs on the junior ‘AIM’ market. The IPO raised approximately £2.1bn, an increase of 170% on the previous year.
However, there were only two IPOs in the first quarter, and only one in London’s main market, according to the Financial Conduct Authority.
