FCA Warns on Rising Corporate Takeover Leaks in UK

The UK's Financial Conduct Authority (FCA) has raised significant concerns over the rising incidence of leaks in corporate takeovers, noting that 38% of deals involving UK-listed firms were reported by the media prior to official announcements between April 2024 and May 2025. This figure surpasses the global average of 31% for deals exceeding $1 billion in 2024.

The FCA attributes many of these leaks to "strategic leaks," where companies deliberately disclose information to influence takeover discussions by attracting or deterring bidders. This trend is also marked by a rise in unusual trading activity before deal announcements, suggesting potential insider trading. In 2024, 38% of UK takeover announcements were preceded by abnormal price movements, up from a five-year average of 32%.

In response to these developments, the FCA has initiated 33 investigations into potential market abuse since 2020, expressing growing concern over market integrity. The regulator has already taken steps, including discussions with top investment banks and issuing formal warnings, to mitigate this issue and safeguard the transparency of the London stock market.

In March 2025, the FCA published Primary Market Bulletin 54, highlighting concerns over the increase in strategic leaks during M&A transactions. The bulletin emphasized that such leaks can cause significant share price movements and damage market integrity. The FCA reminded issuers and advisers of their obligations under the UK Market Abuse Regulation (UK MAR) and the Takeover Code to maintain confidentiality and prevent unlawful disclosures. The regulator warned that individuals involved in unlawful disclosure risk being investigated for market abuse.

The FCA's Market Cleanliness (MC) statistic for 2024 was 37.8%, with a five-year moving average of 32%. The MC statistic measures the proportion of corporate takeover events that experienced significant abnormal share price movements before the announcement. The FCA acknowledges limitations in this metric, noting that not all insider trading results in a price impact during the measured period, and some price moves could be due to accurate market predictions.

Under Article 14 of the UK Market Abuse Regulation (UK MAR), the unlawful disclosure of inside information is prohibited. The Takeover Code's Rule 2.1(a) mandates that all persons privy to confidential information concerning an offer or possible offer must treat that information as secret and minimize the chances of any leak. The FCA has the authority to impose unlimited fines, order injunctions, or prohibit regulated firms or approved persons for breaches of these regulations.

The increase in takeover leaks and associated unusual trading activity raises concerns about market integrity and investor confidence. Leaks can lead to unfair advantages, market manipulation, and potential financial losses for investors. The FCA's proactive stance aims to deter such practices and uphold the transparency and fairness of the UK financial markets.

In previous years, the FCA has successfully reduced leaks in M&A deals by implementing stricter measures. For instance, leaks dropped from 15% (2009-2011) to 6% (2020-2022). However, the recent uptick indicates a resurgence of the issue, prompting renewed regulatory focus.

The FCA's recent actions underscore the importance of maintaining confidentiality during sensitive negotiations and the role of regulatory bodies in ensuring fair practices. By addressing the complexities of strategic leaks and market abuse, the FCA aims to preserve the integrity of the UK financial markets and protect investor interests.