DealLawyers.com Blog

Slaughter & May recently published a report on takeover trends in deals involving UK public companies. The firm says that “bear hugs” have returned in a big way in 2026. This excerpt provides the firm’s analysis of why bear hugs are on the rise:

Valuation gaps.  Differences in valuation expectations between bidders and target boards remain pervasive in UK public M&A, with target boards focused on standalone value and the potential for future upside amidst persistent perceptions of undervaluation. As a result, where private engagement on terms fails to secure a recommendation, bidders are increasingly putting their proposals directly to shareholders. This enables a bidder to test shareholder appetite broadly and publicly (which could not be achieved by wall crossing a select few) and encourage them to influence the target board.

Target engagement.  Bear hugs can be a helpful tactic for bidders struggling to gain traction with a target board, as any resulting shareholder pressure will create momentum and make it harder for a target board to resist engagement. It can also be useful where the bidder has already been identified publicly, and the clock is ticking on its 28-day “put up or shut up” (PUSU) deadline to announce either a firm intention to make an offer or that it does not intend to make an offer.

Public narrative.  A bear hug allows a bidder to frame its proposed premium, strategic rationale and the deliverability of the transaction, and can shift the burden of rebuttal onto the target. This can be particularly effective where the bear hug reveals the bidder for the first time, allowing the bidder to set the tone – at least initially – before the target has publicly established its own narrative.

The report goes on to observe that a bidder that executes bear hug well can put itself into position to frame the valuation debate, demonstrate the credibility of its proposal, build momentum towards diligence access and, ultimately, persuade the target to recommend its offer. However, it also notes that the strategy has risks, which the report also outlines. The report also provides examples of recent UK transactions involving bear hugs and highlights some actions that targets may take in response.

– John Jenkins