European manufacturing & distribution M&A overview: H2 2025
Green shoots of recovery emerge
Our view of the market
M&A and fundraising activity in the European manufacturing and distribution sector showed signs of improvement in the second half of 2025. Overall deal volumes were marginally up: we recorded 2,728 transactions across the whole of Europe. This is a 1% increase on the 2,704 deals in the first half. However, this means we have now had 12 months of growth, following a two-year period of continuous decline, so this may mean we are seeing the green shoots of recovery.
Results varied considerably by region. Scandinavia and Germany, which had reported substantially increased levels of activity in the first half of 2025, were the worst performers in the second half. Scandinavia saw a 15% fall in the number of completed transactions, while Germany reported a decline of 11%. By way of contrast, Italy, which was our worst performer in H1, came back strongly in H2, with a 25% increase in the number of deals completing. The Netherlands also performed well, with 15% more deals completing in H2 than in H1. The UK put in a creditable performance, with a 5% increase in the number of transactions in H2, stretching its lead as the most active country for deal-making in the European manufacturing and distribution sector.
The UK’s late Budget caused uncertainty and the cut to the CGT relief available to shareholders selling to an EOT has made this exit route less attractive from a tax perspective. This in conjunction with the IHT changes in the 2024 budget mean the exit routes for family businesses in particular seem to be narrowing. The Chancellor did announce some sector-specific investments to encourage growth, including some significant changes to capital allowances which may be helpful to many manufacturing businesses. Acquirers and sellers who were in a wait-and-see mode can now plan for transactions with more confidence.
Deal volume by region
Foreign investment in the UK manufacturing and distribution sector
Of the 526 completed transactions in the UK in H2, 186 involved investors from overseas, which is a 16% increase on H1’s 160 total. As we saw in the first half of the year, the amount of capital that these foreign investors are committing to the UK is huge. H2 saw £16.8 billion invested in the UK’s manufacturing and distribution sector by overseas investors, which overtakes the previous record of £16.5 billion, set in H1. Comparing 2025 overall with 2024, the total number of transactions supported by foreign investment is down – 346 UK deals in 2025 versus 366 in 2024. The number of UK deals involving foreign investors is falling at a slower rate than deals involving just UK parties. This demonstrates that the UK is still a relatively attractive destination for foreign investment despite global economic challenges.
Number of UK deals with foreign investors and capital invested
There were several high-profile, cross-border deals worth in excess of £1 billion in H2.
In December, NASDAQ-listed Qualcomm announced it had completed its $2.4 billion acquisition of the UK’s LSE-listed Alphawave Semi, a global leader in high-speed wired connectivity products. These products form part of the core infrastructure enabling next-generation services in a wide array of high-growth areas, including data centres, AI, data networking and data storage.
In August, OrganOx, a 2008 spin-out from the University of Oxford making devices that keep organs alive outside the human body, was acquired by TSE-listed, global medical technology company Terumo Corporation, based in Tokyo, for $1.5 billion.
In terms of where foreign investment is coming from, we saw changes in the UK market in 2025. The US used to account for the bulk of overseas capital invested in the UK manufacturing and distribution sector, but this fell below 50% for the first time in H2. Europe’s involvement remains strong, and the Abu Dhabi Investment Authority is increasingly coming to the fore.
Foreign investment by region
In H1, we counted more UK transactions involving European acquirers and investors than US ones for the first time since we began tracking the data in 2018. This may have been due to US pursuing protectionist policies. That trend has continued into the second half of 2025, with 89 European-backed deals versus 70 US-backed ones. Despite no longer accounting for the majority of foreign-invested transactions, US-backed deals have ticked up in the second half of the year, with an 11% increase in activity compared with the prior six months.
Foreign investment deal count
Spotlight on major sectors
After a good first half of the year for most major sectors in the European manufacturing and distribution market, we saw falls nearly across the whole board in H2. Construction and engineering fared the worst, with a 45% decline in the number of transactions completing compared with H1. Energy saw a 22% fall. The best performing major sectors were consumer goods, and materials and resources. However, even these did not deliver any increase on their H1 numbers but were flat.
Viewing 2025 in its entirety, the best year-on-year improvement came from the aerospace and defence industry, with 38% more transactions completing in 2025 than in 2024. This is hardly surprising, given recent geopolitical uncertainty and heightened threats of conflict.
European deals by major sector
The Moore Kingston Smith Corporate Finance team was busy in the materials and resources space in the second half of 2025. We advised Belgium-headquartered labelling and packaging solutions firm Asteria Group, which is backed by PE house Waterland, on its acquisition of UK-based ProPrint, which completed in September. This marks the fourth deal that Moore Kingston Smith has advised Asteria on in the last couple of years.
Just before the end of the year, the Moore Kingston Smith Corporate Finance team completed a deal in the construction and engineering space, advising M.C. Dean, a US-based leader in cyberphysical engineering solutions at scale, on its acquisition of Bells Power Group, a UK-based provider of integrated power solutions, which specialises in the design, installation and maintenance of standby and backup power systems.
Trending: consumer goods
The European consumer goods sector faced some challenges in 2025. European consumers remained cautious amid economic and political uncertainty, prioritising essential purchases and bargain-seeking over discretionary spending; a trend that continued through late 2025 as sentiment remained mixed and spending intentions softened. Private label products maintained strong traction as consumers traded down or sought better value, supporting grocers’ share gains even as overall retail spending patterns evolved. Rising costs for raw materials and regulation (including upcoming EU sustainability and packaging requirements) added pressure to margins and compelled many firms to refine their pricing, supply chain and product strategies.
Against that backdrop, transaction activity held up well in H2. The food and drinks sector in particular yielded several deals, the largest of which was the €3.6 billion investment by Goldman Sachs and the Abu Dhabi Investment Authority in Yorkshire-based Häagen-Dazs owner Froneri, in a deal which valued the ice cream company at around €15 billion. Froneri is a joint venture between European buy-out firm PAI Partners and Swiss packaged food giant Nestlé.
Beyond the mega-deals, a number of UK food and drinks companies changed ownership in H2 2025. This included the sale of artisan vegan cheese brand La Fauxmagerie to Honestly Tasty; the purchase of premium milkshake brand Shaken Udder by Spanish family business Idilia; and the sale by THG of its Claremont Ingredients business to European flavourings manufacturer Nactarome in a deal worth c. £100 million.
Moore Kingston Smith Corporate Finance advised on two transactions allied to the food and drink space in H2. In September, the team advised LDC on its investment in Bespoke Kitchen Foods, a provider of vegetarian and vegan products for the pub and casual dining market, helping the business to secure a debt facility from OakNorth.
In November, we advised the founder shareholders of Edwards and Ward, a fresh food caterer for schools and businesses, on the MBO of the majority of their shares by the existing management team.
PE investment in UK deals
Most of the UK deals we recorded in H2 involved PE investors, either acting directly or via an existing portfolio company. PE remains the fundamental driver of transaction activity in the manufacturing and distribution market.
Excluding fundraisings and looking at UK M&A transactions in isolation, we see that, while PE still underpins the market, corporate acquirers account for most deals. PE was involved in 41% of UK M&A transactions in H2, down on the 42% in H1 but still comfortably within normal historical levels.
The UK PE market was boosted by a series of interest rate cuts in 2025, making leveraged transactions more affordable than they have been for a couple of years. Economists expect further rate cuts in 2026, lending more power to the leveraged buyers. Despite a more constrained fundraising environment, PE still has significant dry powder to invest in the UK. We expect increased activity by PE-backed buyers as market conditions improve.
Percentage of PE-backed M&A deals
Trends in PE: public-to-private transactions
There is a growing trend of PE buyers acquiring legacy listed companies, in public-to-private (P2P) transactions. Amid shifting global capital flows, PE sponsors continue to target listed assets as a means of portfolio transformation and growth. The persistent discount of some listed companies to their intrinsic value has created fertile ground for opportunistic acquisitions, particularly in the manufacturing sector.
One such P2P transaction that completed in H2 was US PE house Atlas Holdings’ acquisition of De La Rue, the iconic British banknote printer, in a deal worth £263 million. Founded in 1813, De La Rue was a pillar of the UK’s industrial and financial infrastructure for over two centuries and was a listed company for almost 80 years. The company also printed UK passports until 2018 as well as postage stamps and playing cards during its earlier years.
In November, Swiss-listed u-blox, a chipmaker and provider of positioning and wireless communication technologies, was acquired by US-headquartered PE house Advent International for $1.3 billion. 
Trends in PE: corporate carve-outs
A notable trend in the PE landscape has been the increasing prevalence of carve-outs, whereby a parent company, often publicly listed, divests a subsidiary or non-core business to a PE buyer. Such transactions can unlock value without requiring a full sale of the group and may prompt a re-rating of an undervalued parent. The resulting proceeds can then be redeployed to support growth initiatives, strengthen the balance sheet or be returned to shareholders.
In July, US-headquartered PE house Advent International announced it was to acquire a 70% majority stake in UK-based, LSE-listed Reckitt’s Essential Home portfolio, with Reckitt retaining a 30% stake in the carved-out business. The carve-out of Essential Home has created a dedicated global home care platform with a portfolio of leading brands, including Air Wick, Calgon, Woolite and Cillit Bang. The transaction, which completed in December, valued Essential Home at an enterprise value of up to $4.8 billion, including up to $1.3 billion of contingent and deferred consideration.
In September, UK PE house Rcapital completed the acquisition of UK-based chemicals manufacturer F2 Chemicals in a corporate carve-out from its listed Japanese parent, Resonac Corporation. The acquisition marks Rcapital’s fifth cross-border carve-out in six months.
Outlook
The outlook for 2026 is unclear but we remain hopeful of an improving environment for transactions in the European manufacturing and distribution sector, as buyers and sellers continue to align on valuations. High-growth areas, including aerospace, defence and specialised manufacturing (e.g. green transition technologies) are expected to drive activity. PE is preparing for increased activity, while strategic corporate acquirers are seeking to reposition themselves through transformative deals. That said, this optimism remains vulnerable to geopolitical risk and the potential for tighter credit conditions.
Focusing on the UK, the country’s economic outlook is currently characterised by cautious optimism for modest short-term growth. Inflation is predicted to keep falling, and economists expect the Bank of England to announce further rate cuts in the coming months, which will help leveraged transactions.
“As valuations converge and capital mobilises, the next phase of deal activity in the European manufacturing and distribution sector will be shaped by focus, strategic ambition and disciplined execution.” Jeremy Read, Partner – Head of Manufacturing, Moore Kingston Smith
“After several challenging years for the manufacturing and distribution sector, marked by declining deal activity and rising tax pressures on founders and family-owned businesses, the outlook is shifting. With interest rates expected to ease and inflation stabilising, we expect 2026 to see a meaningful return to growth across many parts of the market.” Marc Fecher, Partner – Chair of Corporate Finance, Moore Kingston Smith
Authors
Methodology
In compiling our deal tracker we use Pitchbook, an international financial data provider that gives access to comprehensive data on the private and public markets. Moore Kingston Smith has analysed completed transactions by European and UK based manufacturing and distribution companies from 1 July 2025 to 31 December 2025 to identify the trends in this report. This research aims to capture all transactions by European and UK companies that fall within the manufacturing and distribution sectors. Inevitably there will be transactions that have taken place that have not been captured.
