Special relationship: US-UK M&A flourishes as transatlantic partners return to t…

The US-UK “special relationship” is bearing fruit once again. After a breakout 2024 that saw US$46.9 billion poured into UK targets, more than triple 2023’s total, the transatlantic corridor still appears to be wide open.

Headwinds have not completely subsided, but US dealmakers are operating from a position of strength. Stateside, resilient consumption and a still‑tight labor market have kept GDP growth ticking. While Q1 2025 posted a modest economic contraction of 0.5 percent  on an annualized basis, this was largely a technicality driven by imports being pulled forward in anticipation of tariffs. The underlying economy remained solid, and Q2 rebounded to 3 percent annual growth.

Across the Atlantic, UK price pressures hover well above target and quarterly output is uneven. Markets had been pricing in up to two rate cuts by the end of 2025, but sticky inflation, particularly in services, has prompted several major banks to walk back those calls. The Bank of England may now keep rates on hold longer than previously expected.

This doesn’t seem to have blunted interest in UK targets, and the broad assumption is that rates in both countries have peaked. Moreover, the enduring attractions of the UK market—including relative valuation, transparent governance and shareholder‑friendly rules under the UK Takeover Code that make it easier for acquirers to win support for bids—continue to position it as one of Europe’s most compelling destinations for international acquirers.

Buyer’s market 

Inbound activity from the US to the UK has remained resilient in recent months. Mergermarket data shows 171 announced deals worth US$20.9 billion in H1 2025, representing declines of 8.6 percent in volume and 38.6 percent in value compared with an exceptionally robust H1 2024.

However, this masks the fact that deal value surged in the second quarter to US$13.7 billion, reaching the highest quarterly total in more than a year and coming close to matching the full-year value recorded in 2023. At the time of writing (August 20), deal value for Q3 had already surpassed that figure, with a total of US$20.8 billion from only 33 deals.

The remarkable value growth came on the back of the two biggest transatlantic transactions of the year, struck in July and early August. The largest saw US life sciences giant Merck announce the purchase of UK-based Verona Pharma for around US$10 billion, in a bid to expand its cardio-pulmonary pipeline and portfolio.

The second-highest-value deal was PE firm KKR’s proposed buyout of Spectris, the listed manufacturer of precision measurement instrumentation and controls, for £4.8 billion (US$6.4 billion), outbidding rival Advent International.

In the first half of the year, headline transactions included DoorDash’s £2.9 billion (US$3.9 billion) offer for Deliveroo, Honeywell’s US$2.4 billion move on Johnson Matthey’s process‑technology units, and American Axle & Manufacturing’s US$1.4 billion bid for Dowlais Group, an automotive engineering company.

Meanwhile, Qualcomm’s US$2.4 billion offer for Alphawave Semi once again signaled the seemingly inexhaustible appetite for semiconductor assets.

Public market progress

The London Stock Exchange has become a hunting ground for US buyers amid this spree. UK public M&A activity surged in the first half of 2025, with the number of deals climbing from 10 to 27 and total deal value jumping 353 percent, to £18.5 billion.

These public market deals speak less to confidence in the UK economy, which remains fragile, than to faith in its rule‑of‑law framework, deep management talent and technological expertise, and the possibility of relisting or refinancing assets in US markets.

Of course, attractive valuations are another major draw. A wide price-to-earnings ratio gap leaves UK stocks trading well below their American counterparts, a core reason behind heightened inbound interest. The FTSE All-Share Index remains 42.6 percent cheaper than the S&P 500 and, even on an equal-weighted basis, presents a 24.5 percent discount.

At a Treasury Committee hearing in June, Financial Conduct Authority chief executive Nikhil Rathi noted this valuation disparity is making UK companies highly attractive, “particularly to US buyers.”

Regulatory reforms 

UK regulators, meanwhile, are telegraphing a more lenient M&A regime. The Competition and Markets Authority is overhauling its merger review process to deliver faster and more predictable outcomes. New draft guidance, released in June, embeds its new “4Ps” principles—pace, predictability, proportionality, process—into reviews.  

Among the proposed measures are targets to significantly cut pre-notification and phase 1 timelines, moves aimed at reducing deal uncertainty and aligning the UK regime with broader pro-growth policy goals. At the same time, the competition watchdog is encouraging acquirers to present credible efficiency arguments upfront, signaling greater openness to deals that can deliver tangible consumer or environmental benefits. If passed, the changes could make the UK an even more attractive jurisdiction for foreign capital.

Trade frictions

Despite this upbeat dealmaking backdrop, challenges beyond lackluster growth and stubborn inflation remain. Trade frictions have the potential to slow momentum. The limited US-UK trade agreement announced on May 8 preserved the 10 percent baseline tariff on most UK goods, while modestly reducing duties on certain cars and steel products. Although framed as a de-escalation, US officials have signaled support for broad “reciprocal” tariffs. The UK may not be a major trade surplus country with the US, but this still raises the prospect of trade barriers for British exporters.

For dealmakers, this can complicate everything from earnings forecasting to valuation models. Tariffs can squeeze margins, particularly for manufacturers and exporters with transatlantic supply chains, and may force acquirers to reassess integration plans, cost baselines or routes to market. Even when deals proceed, heightened uncertainty around policy direction can result in longer due diligence cycles and more conservative bid strategies.

Go west, dealmakers

Although on a smaller scale, UK companies and sponsors are also pushing more capital into the US, attracted by its market breadth and depth, as well as its technology leadership. H1 2025 delivered 101 UK‑to‑US deals valued at US$8.5 billion, up 8.6 percent in volume and 24.8 percent in value from H1 last year. Meanwhile, by August 20, Q3 had seen a further US$1.6 billion of deals from the UK into the US—only US$319 million less than all of Q3 2024.

GSK led the outbound charge, with a US$2 billion acquisition of BP Asset IX, a Boston Pharmaceuticals subsidiary that holds the development and commercialization rights to efimosfermin, an investigational drug targeting non-alcoholic fatty liver disease. The pharma giant was also behind the third-biggest play, purchasing biotech developer IDRx for a little under US$1.2 billion.  

Elsewhere, UK-based WE Soda acquired Genesis Energy’s US alkali business for US$1.4 billion in cash, securing a major foothold in the North American natural soda ash market. In tech, Tripledot Studios struck a US$800 million deal to acquire a portfolio of mobile gaming studios from AppLovin, adding popular casual titles and scaling its global user base.

For UK companies, buying into the US offers a way to offset sluggish domestic growth, diversify revenues and gain exposure to the world’s most innovation-rich economy. It also opens the door to significantly larger addressable markets, deeper capital pools and, for financial sponsors, higher potential exit multiples.

As political cycles, trade tensions and inflationary forces continue to ebb and flow, expect transatlantic M&A to remain active, opportunistic and, above all, strategically motivated. Investors on both sides of the Atlantic have come to accept uncertainty as the baseline rather than an anomaly. They are no longer waiting for it to subside but are learning to transact through it.