New research shows jump in M&A deals where UK companies are breaking themselves up
The number of UK carve-out deals increased 8% to 468 last year*, up from 435 the previous year, new research from business advisers and chartered accountants Lubbock Fine shows. Carve-out deals are where a company spins off or sells one part of its business.
Lubbock Fine says businesses are stepping up efforts to streamline their operations and focus on their long-term strategic priorities by carving out non-core assets. The combined value of these carve-out deals was £63bn, underlining continued appetite for divestments despite the relative complexity of these deals.
For listed companies, the increased presence of activist investors is putting more pressure on them to sell off non-core assets.
For private companies there may be a desire to use these deals to pay down debt or to free up capital to invest in the core business.
The recent announcement from Unilever to sell its entire food division could become one of the most significant carve-out deals in recent years. The deal is said to be worth £33.8bn as Unilever seeks to sell all its remaining food business to McCormick & Company, the makers of French’s mustard.
The most notable corporate divestment last year also came from Unilever. It separated all its ice cream products from its core business and created the Magnum Ice Cream Company. The new company was then listed on the Amsterdam, London and New York stock exchanges and was worth £7.7bn.
Diageo, which is reducing its debts, has sold off its share in East African Breweries for US $2.3bn and its cricket team for US $1.8bn.
The trend for carve outs reflects a broader shift among corporates to prioritise core, high-performing business areas while divesting assets that may no longer align with their long-term strategy.
Rahid Rashid, partner at Lubbock Fine, says: “The rise in the cost of debt caused by the Gulf crisis may add pressure on businesses to sell assets to improve their balance sheets.”
“Longer term we are seeing a clear uptick in carve-out activity as businesses take a more disciplined approach to portfolio management. Divesting non-core assets not only frees up capital but allows management teams to concentrate on the areas of the business that will drive long-term growth.”
“While carve-outs can be highly attractive, they can be more complex than acquiring a standalone business. That complexity can limit the pool of potential buyers, but it also creates opportunities for well-prepared acquirers to secure assets at competitive valuations.”
Rahid Rashid adds: “Separation from the parent company is a critical part of any carve-out which offers a valuable opportunity to unlock and clearly define the standalone value of a business. With the right planning, businesses can position carved-out assets for future growth and maximise returns for both buyers and sellers.”
*Year end: December 31 2025