Big Yellow Group Faces Rising Business Rates and Uncertain Future Amid Takeover Talks

Britain’s largest self storage business, Big Yellow Group, is set to incur a significant increase in business rates as a result of measures introduced in Rachel Reeves’s recent budget. The company, which operates over 100 locations across the United Kingdom, reported that its rates bill will reach £22.9 million for the 2027 financial year. This figure is £1.8 million higher than previous forecasts, representing a rise of 8.5 percent. Forecasts indicate further increases in 2028 and 2029 by 3.1 percent and 4.2 percent respectively. These escalating costs are expected to have a moderate effect on Big Yellow’s profitability, with the company’s shares falling by 1.1 percent to close at £10.78 as investors absorbed the news.

Big Yellow was established in 1998 by Nick Vetch and Jim Gibson, who both remain actively involved as executive chairman and chief executive. Recent months have seen private equity giant Blackstone express preliminary interest in a potential acquisition of the company, with the market valuing such a deal close to £2.7 billion. Blackstone had previously sought additional time to evaluate the implications of the UK budget’s business rates reforms before making a decision on its bid. The private equity firm is understood to have since withdrawn from discussions, with City sources suggesting that agreement on price was the main stumbling block rather than policy changes.

The budget’s reform of the business rates system introduced permanent tax relief for more than 750000 retail hospitality and leisure properties starting in 2027. This relief is funded by a levy imposed on the largest business properties, those with a rateable value of £500000 or more. Approximately a quarter of Big Yellow’s estate will be liable for this extra levy. Company management continues to seek mitigation via appeals on rateable valuations, noting past success with 35 rebates totalling £5 million out of 51 appeals initiated since 2017. A further 63 appeals currently remain unresolved.

Other major businesses such as Whitbread are facing even greater impacts from the rates reforms, with estimates as high as £50 million in extra costs from 2027. The government’s intention had been to support high street businesses confronting online competition; however, some industry voices including UK Hospitality’s chairwoman have warned that the relief may fall short for many.

Big Yellow’s future remains in flux as the firm’s founders near retirement and the company approaches its thirtieth anniversary. The board has held discussions with a small number of prospective buyers and explored a range of potential strategic options. Few anticipate a merger with European competitor Shurgard or UK peer Safestore, given overlapping sites pose operational difficulties. Recent sales activity involving Access Self Storage are also judged unlikely to lead to a deal due to similar issues and ownership preferences among the current leadership.

The likelihood of a private equity acquisition remains, specifically for those offering a cash-based exit which may align better with the founders’ plans. Ultimately, the company continues to express confidence in its business strategy as the storage market adjusts to a new regulatory landscape.