UK high street brands draw sale interest as private equity seeks exits

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UK high street brands sale interest

Highlights

Private equity groups seek to exit UK assets like PizzaExpress, Morrisons and Third Space as high street deal activity revives after years of turbulence.
UK target retail deal value reached $10.1bn across 54 deals in 2024, more than doubling nearly $5bn from last year per Dealogic data.
Despite some renewed interest, investor caution persists due to UK inflation and weak growth, with demand focused on brands with expansion potential and durable earnings.

Consumer deal pipeline gathers pace

As reported by Financial Times, private equity groups are seeking to offload assets including PizzaExpress, Morrisons and Third Space as transaction activity returns to parts of the UK consumer sector after several turbulent years.

That momentum builds after Sycamore agreed last week to sell Boots in an $8.9bn deal to Canada’s Weston family, a transaction bankers say could help unlock further activity on the UK high street. In recent weeks, Sainsbury’s has held takeover talks with Morrisons, while PizzaExpress has appointed bankers to explore a sale.

Other private equity-backed chains also exploring transactions include Third Space and Itsu, while Waterstones is considering an initial public offering. The owners of Poundland are also trying to sell the struggling discount retailer.

Thomas Christl, a consumer and retail banker at BNP Paribas, says the market is now seeing a level of activity absent for some time and expects that trend to continue into 2027.

Muted economy shapes investor appetite

Despite a subdued economic backdrop, investors are returning selectively to consumer assets as private equity firms look to exit holdings bought around the Covid-19 period, when lockdown-driven shifts in behaviour and low interest rates supported a wave of takeovers.

UK target retail deal value has topped $10.1bn this year across 54 transactions, according to Dealogic data, up from nearly $5bn in all of last year. Shirav Patel, Morgan Stanley's Emea head of retail investment banking, says activity is clearly higher than it has been for some time, although it remains uncertain how many additional deals will be announced.

Bankers and investors say the most attractive assets are strong brands with multiple expansion options, but caution remains high over earnings durability and future growth. Majid Ishaq of Rothschild & Co says buyers are focused on how sustainable profits are and where growth can come from, while one London-based private equity investor says few in the market are bullish on the UK consumer because inflation and weak growth continue to weigh on sentiment.

Our earlier article on Boxer’s leadership transition explained that CEO Marek Masojada plans to retire in February 2027, with long-serving executive Justin Galloway appointed CEO-designate as part of a succession plan set during the company’s 2024 JSE listing. We also outlined Boxer’s rapid store expansion under Masojada and the market context around its post-listing performance as it prepares for its next growth phase.

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