London (Parliament News) – Shareholders of Royal Mail and Anglo-American face takeover deadlines, potentially leading to foreign ownership. Czech billionaire Křetínský targets Royal Mail, while Australia’s BHP pursues Anglo-American.
Shareholders in Royal Mail’s proprietor and the mining group Anglo American are awaiting a conclusive deadline on Wednesday for firm proposals that could see two of the UK’s most famous companies fall into foreign ownership.
Can Křetínský and BHP acquire UK companies by the deadline?
Czech billionaire Daniel Křetínský has made a strategy to International Distributions Services (IDS), which operates Royal Mail, while Australia’s BHP is trying to purchase its rival Anglo American, a stalwart of London’s FTSE 100 index. Under UK takeover rules, companies have a narrow window after approaching to make a strong offer or walk away – known in the City as the “put up or shut up” deadline. For both companies, the cutoff point is 29 May.
Of the two, the offer for Royal Mail’s owner by Křetínský’s EP Group, which made its capital in coal-fired power stations, appears more possible to succeed. IDS stated earlier this month that it was “minded to recommend” the recommendation if a firm offer was made after talks.
Can BHP and Křetínský secure their UK acquisitions?
Křetínský’s bid adores the postal service at £3.5bn, although that is yet well short of the £5.3bn market value the group reached in late 2021. IDS shares were selling at 324.6p on Tuesday morning, well below the 370p a share bid from EP Group. Shares generally trade below a request price if enough investors acknowledge there is a significant chance the deal will fall through.
On Friday, the IDS board cautioned in delayed annual results that Křetínský’s bid could develop risk around the company’s finances beyond the coming 12 months if the new landlords were to struggle to preserve existing loans and secure fresh funding. If Křetínský does make a strong offer, a takeover of the 508-year-old postal assistance by a foreign firm would face considerable political scrutiny. The chancellor, Jeremy Hunt, has expressed the government would examine the national security implications, and whoever wins the 4 July general election would likely continue that policy.
Can Anglo-Americans resist BHP’s acquisition attempts?
BHP’s endeavour to take over Anglo-American has so far been more troublesome. Anglo has abandoned three takeover proposals, the last of which was worth £38.6bn. BHP has increased its offer from an initial £31bn, and some critics believe there is limited scope to increase the bid, which would already be the largest in the history of the mining sector.
A combined company would be a global participant in markets for commodities including iron ore, potash, and metallurgical coal used for steelmaking. Anglo American’s copper purchases are also thought to be particularly appealing to BHP, because of the metal’s crucial role in the transition to a net zero energy system.
Anglo’s chief executive, Duncan Wanblad, has reacted to the bid with a strategy to overhaul the 107-year-old company, including a commitment to break up the business and market its platinum division and its De Beers diamond arm.
The bids have drawn particular scrutiny because some pundits are concerned that British businesses are fundamentally underestimated when compared to rivals in other countries. Stuart Clark, the portfolio manager at Quilter Investors, stated last week that investors should beware of the “comforting short-term growth to investors’ portfolio” from increased mergers and acquisitions (M&A) activity.