London Is Becoming an Industrial Disassembly Market and 2026 Will Accelerate It
by Jaffa Levy
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Britain still talks about productive renewal. London’s market is teaching boards a different lesson. Simplify the company, sell the awkward parts, return cash, and become a cleaner story for analysts. That is not a moral judgement. It is the incentive pattern now visible in official announcements, activist letters, and deal terms. The chokepoint is not whether Britain has engineers. It is whether London can still fund and hold complex industrial systems in public view.
Layman’s guide: what is a “disassembly market”?
Imagine the stock market prefers simple stories. A business that does one thing is easier to compare and price than a group that does four different things. When investors dislike complexity, the share price suffers. That invites activists who demand a break up or sales. The company sells divisions to private buyers and uses the cash to buy back shares or pay dividends. Over time the stock market ends up listing simpler companies, while complicated industrial platforms drift into private ownership.
The chokepoint is patience, not capital
Most people hear “break up” and assume the argument is about efficiency. Sometimes it is. But the deeper issue is time horizon. A diversified industrial group can carry long cycle investment through downturns, cross support units when one market dips, and sustain specialist teams that cannot be rebuilt on demand. If the market persistently marks that structure down, then complexity becomes expensive to keep listed. The company is pushed toward a simpler shape, or out of public markets entirely.
That is why this matters for 2026. Once a template is proven, it spreads. Boards become pre emptive. Activists become bolder. Private buyers shop the gap between public pricing and private valuation.
Smiths: the script in three acts
Act one: pressure. In January 2025, activist investor Engine Capital wrote publicly to Smiths Group’s board and argued that the company’s structure and capital allocation were destroying value. It pressed for a strategic process and made the logic explicit: a discounted structure becomes a target, and the board is expected to act.
Act two: focus and buybacks. Smiths then issued a strategic update that framed a narrower “future Smiths” and increased its share buyback programme to £500 million. The language is the tell. The market is not just being offered operational improvement. It is being offered a simpler shape plus accelerated shareholder returns.
Act three: the disposals. In September 2025, Smiths agreed to sell Smiths Interconnect to Molex, part of Koch Industries, at an enterprise value of £1.3 billion. In December 2025, Smiths agreed to sell Smiths Detection to funds advised by CVC at an enterprise value of £2.0 billion, with expected net cash proceeds of about £1.85 billion after expenses and separation costs. Smiths itself framed the two disposals together as a combined enterprise value of £3.3 billion.
Whether you admire or dislike this, you should recognise the mechanism. Complexity is converted into a cash event. The public market sees a cleaner company and a capital return story. Private capital acquires the discarded unit.
DCC: a different company, the same discipline
DCC is not a traditional engineering conglomerate, which is why it matters. It shows the same market discipline spreading across corporate types: simplify, concentrate, distribute.
In September 2025, DCC announced completion of the sale of DCC Healthcare and stated an intention to return £800 million to shareholders. It set out the mechanics: a £100 million on market buyback, a planned £600 million tender offer after interim results, and a remaining £100 million linked to deferred consideration timing. On the technology side, DCC sold its UK and Ireland Info Tech business to Aurelius at around £100 million enterprise value and announced completion after regulatory approvals.
Again, do not get lost in the labels. The move is the same: portfolio contraction paired with explicit capital return.
Layman’s guide: why should anyone care?
Because it changes where “hard” capability sits. A large complex group can keep investing when one division suffers, because another division may still be strong. If markets punish that structure, companies will split into smaller units that are easier to price, or they will be bought by private firms. The factories may still exist, but the incentives change. Private owners often plan around an exit. Public owners answer to quarterly pricing. Either way, the ability to sustain long term investment becomes harder when the market pays more for simplification than for stewardship.
The wider pattern: takeovers, exits, and London’s pricing problem
This is not only about break ups. It sits inside a broader UK pattern: when London valuations lag, private bidders can offer large premiums and still see value. The Spectris takeover battle in 2025 made that visible, with bids framed at very high premia to the pre approach share price and a final agreement reported around £4.7 billion including debt.
At the same time, London continues to face a persistent narrative and reality problem around liquidity and valuation depth. When firms believe they can get a better price elsewhere, or can get a better deal by going private, the public market becomes a staging ground rather than a home.
What 2026 will look like if this continues
Expect more boards to pre empt the activist playbook by simplifying earlier. Expect more capital returns tied to disposals, because that is what the market pays for. Expect more private buyers circling divisions that public markets treat as “non core”. The result is not an overnight collapse. It is a slow change in the institution types Britain can sustain on its own stock exchange.
Britain does not only need industrial capability. It needs vehicles that can finance, govern, and hold that capability through cycles. If London becomes a place that prices only what is easy to model, then Britain’s industrial future will increasingly be governed elsewhere, off exchange, and on different incentive clocks.
The contradiction is simple. Britain talks about rebuilding. London rewards unbuilding, because unbuilding is easier to price.
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