Public M&A – The Rise Of The Bear Hug In The UK

Why a surge in voluntary possible offer announcements is reshaping the dynamics of UK public takeovers — and what target boards need to know

In UK public takeovers, hostile takeovers are unusual. Bidders place value on securing the target board’s recommendation of an offer before taking it to shareholders and are typically reluctant to voluntarily start a 28-day ‘put up or shut up’ period.

Why, then, has 2026 seen a slew of bidders in the UK choosing to go public with possible offers without the support of the target board? We explore the unusual market dynamics and bidder tactics currently on display and discuss practical takeaways for companies and their advisers.

In brief

• In UK takeovers, ‘bear hugs’ – where a bidder voluntarily makes a possible offer public without target board support, with the aim of appealing directly to target shareholders – are relatively rare. However, 2026 has already seen more than half a dozen of these announced.
• The bear hug tactic is often deployed where sustained private engagement with the target board is not delivering results for the bidder. However, this year bear hugs are playing out at various stages of engagement, including, on two occasions (DNO’s possible offer for Genel Energy and Prologis’s possible offer for SEGRO), after only a single private approach has been made to and rejected by the target.
• Bear hugs are not, however, usually precursors to a hostile offer – in fact their aim is to avoid that. Bidders place value on ultimately obtaining target board support and a bear hug will aim to elicit this. We have seen numerous bidders this year (including on the possible offers by Prologis for SEGRO, Helios for CAB Payments, Railpen for IP Group and Castlelake for easyJet) use their possible offer announcements to appeal to target shareholders and ask them to encourage the target board to engage with the bidder’s proposal.
• Given that current market dynamics indicate a heightened risk of a bidder taking its proposal to shareholders at an early stage of discussions, target boards should be alive to this and, upon receipt of an initial approach, work with advisers to prepare a public response strategy in the event that happens.

What is a ‘bear hug’?

A ‘bear hug’ is not defined under the UK Takeover Code – nor is it a tactic that is unique to UK takeovers. It is a term generally used to describe a bidder voluntarily announcing a possible offer, and publicly appealing to target shareholders for support, ahead of securing the target board’s recommendation of that offer.

Notably, while target boards are not permitted to take action to frustrate a bid, there is no obligation on them under the Takeover Code to provide information to, or facilitate bids by, a potential bidder. A board that views a takeover offer as not being in the interests of shareholders therefore has no duty (under the Takeover Code, statute or otherwise) to expend time or funds to assist a bidder. Persuading shareholders to pressure a board to engage in relation to a bid can therefore be a powerful tactic.

This tactic can be used either to make a possible offer public for the first time or, where there has already been a leak, to voluntarily update the market about improved proposals submitted since that leak (see, for example, EQT’s possible offer for Intertek and Castlelake’s possible offer for easyJet).

Why are bear hugs unusual in UK public takeovers?

Secrecy is typically paramount in UK public takeovers. Bidders tend to prefer securing the support and recommendation of the target board before going public with takeover proposals. While leaks occur and, under Rule 2.2 of the Takeover Code, announcements of possible offers are then required to be made, it is relatively rare to see bidders proactively announcing possible rather than firm offers.

A key reason for this in the UK market is the ‘put up or shut up’ (‘PUSU’) regime under Rule 2.6(a) of the Takeover Code – a regime which supports the overarching principle that a target company must not be hindered for longer than is reasonable by a takeover bid (General Principle 6 of the Takeover Code). Under Rule 2.4 of the Takeover Code, an announcement that starts an offer period for a target must name any potential bidders. Rule 2.6(a) then provides that, once named, a potential bidder must within 28 days announce either a firm offer or that it will not be making an offer. 

If a bidder announces a firm offer, its financial adviser will have to confirm that the bidder has sufficient funds available to pay any cash consideration in full (known as the “cash confirmation”), so any financing facilities that it needs will have to be put in place in that 28-day period.

If the bidder elects not to make an offer, it will be locked out from making a further offer or possible offer (and taking other steps such as making any statement that raises the possibility that an offer might be made) for six months, subject to certain limited carve-outs.

The 28-day PUSU period will normally only be extended by the Takeover Panel at the request of the target company – a bidder cannot request an extension. A bidder who voluntarily triggers a PUSU period therefore needs to be prepared either to make a hostile offer (which is fully financed) or to walk away if its tactics do not secure at least some level of target board support and engagement within four weeks (see, for example, Empresaria Group’s decision not to request a further extension of the PUSU period for a consortium exploring an offer in July 2025, leading to that bidder walking away).

However, whilst it is unusual for a bidder to voluntarily trigger the PUSU deadline, 2026 has already seen bear hug tactics in play in over half a dozen UK public takeover situations. Of these, three bidders ultimately secured the recommendation of the target board before announcing a firm offer (Prologis gaining support from SEGRO, EQT from Intertek and Zurich from Beazley); one bidder announced a hostile preconditional offer just prior to expiry of the PUSU period (Helios seeking to acquire CAB Payments); one bidder walked away (Railpen from IP Group); a sixth bidder, Castlelake, saw a superior bidder, Apollo, enter the fray and ultimately secure the support of the target, easyJet; and the seventh, announced on 6 August, remains a developing situation at the time of writing (DNO in its possible offer for Genel Energy).

Combination with other tactics

Bidders in 2026 are combining bear hugs with an array of other tactics to try to secure target board engagement and support for their offers. These include:

Going public early: In UK public takeovers, the first indicative offer may well not represent the full amount the bidder expects to pay. Instead, at least a couple of rounds of private offers and rejections are typical before a target board considers a price might be recommendable and engages more fully with a bidder. 

This is perhaps especially true at present given depressed UK equity valuations have made UK listed companies attractive targets for overseas and private equity bidders alike. Widespread media commentary that UK listed shares are undervalued means boards will be cautious about recommending offers that, while representing a premium to current share prices, offer shallower premia when measured against historical trading levels. 

Given this, it is perhaps surprising that two bidders – Prologis and DNO – made their possible offers public after a single rejection from the target board. Similarly, while Zurich had presented offers to the Beazley board in June 2025, in January 2026 it too made a possible offer announcement after a single, more recent, offer was privately rejected by the Beazley board.

While DNO’s possible offer for Genel Energy is (at the time of writing) at an early stage, it is interesting to see that this tactic appears to have worked for both Prologis and Zurich, as both bidders secured target board engagement and, ultimately, recommendations ahead of making a firm offer announcement.

‘Best and final’: Two of the three successful bidders (EQT Fund Management in its possible offer for Intertek Group; and Prologis in its possible offer for SEGRO) combined a bear hug with later declaring its proposal to be ‘best and final’. Under the Takeover Code, a bidder will be held to what it says – therefore if it says its offer is ‘best and final’, it will not be able to increase the offer unless it has specifically reserved the right to do so in certain circumstances that then emerge (typically, bidders will reserve the right to increase in the event a competing bidder emerges). This principle of being held to what you say is to ensure that shareholders do not deal in the market on the understanding that the price will not be increased, only to find that it subsequently is.

Going best and final can add pressure on target company boards to engage with bidders to secure a firm offer at a price that shareholders may find attractive, rather than holding back in the hope of achieving a further price bump in exchange for a recommendation or co-operation.

Activist-style campaigns: Whilst the bear hug bidders in 2026 are making direct appeals to target shareholders in their possible offer announcements, Prologis went even further and published investor presentations in support of its campaign to acquire SEGRO. Such tactics are a rarity, especially for corporate bidders such as Prologis, and are more akin to the tactics used by a shareholder activist. 

Why not just launch hostile offers?

There are many reasons why recommended rather than hostile offers are so prevalent in UK takeovers, including the following:

Due diligence: Bidders are likely to want to conduct due diligence before confirming the price they are willing to offer to acquire the target. In a hostile scenario, bidders will have to rely solely on publicly available information.

Acquisition structure: In UK takeovers, schemes of arrangement are far more common than contractual offers (they have been used on over 80% of UK bids in the past five years). A key benefit of a scheme is that, provided the scheme is approved by a majority of shareholders together holding at least 75% of target shares, the bidder will obtain 100% control of the target; on a contractual offer, by contrast, a bidder cannot guarantee 100% control unless it obtains 90% acceptances of its offer (the threshold at which it will be able to “squeeze out” any remaining minority shareholders under the UK Companies Act 2006).

As a scheme is an arrangement proposed by the target company to its shareholders, if a bidder does not have target board support, it will likely have to use a contractual takeover offer and in doing so accept the risk of not obtaining 100% of the target shares.

Regulatory approvals: The value of a target board’s support lies not just in encouragement for shareholders to accept the offer – there may also be significant benefit in the target company assisting with any competition, FDI and other regulatory approvals in connection with the takeover. For example, the bidder may need information from the target to definitively confirm which filings and approvals are needed, and regulators may require information from the target to assess the request for an approval. 

Helios’s hostile offer for CAB Payments is a good example of the issues bidders can face when they lack this support. On 27 March 2026, Helios released an RNS announcement describing that lack of engagement from the CAB Payments board was forcing Helios to make regulatory filings with incomplete information and appealing to shareholders to ask the CAB Payments board to provide the requested information.

Takeaways for UK listed companies

The ongoing media commentary around UK listed companies being undervalued means boards may well already be refreshing their takeover defence manuals and considering steps to take if they want to avoid becoming a takeover target.

As part of this planning, boards should also plan for how they would respond if a potential bidder takes its approaches public at an early stage – potentially after a single private offer has been rejected. If that happens, they will need to be ready to explain to shareholders the reasons for rejecting the approach and not engaging with the bidder. They should also be considering at what price they would be willing to engage and considering what (other than a better offer price) they can secure in exchange for a recommendation, for example commitments as regards employees.

This article was originally published on 31 August 2026 in Deal Talk: Australian M&A Update. Access the original version here.