BUSINESS LIVE: Anglo American snubs BHP bid; NatWest profits fall; Pearson English language boost

Anglo American has rejected rival BHP Group’s £31.1billion takeover proposal, which the London-listed miner said significantly undervalued the company and its future prospects.

But analysts last night said BHP would have to improve its offer, which faced political opposition in South Africa and investors describing the bid as ‘opportunistic’ due to Anglo’s ‘depressed’ valuation.

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown:

‘The FTSE 100 has reached yet another untouched summit, as investors remain in a positive mood. There has been a flurry of strong results from big hitters like Barclays and AstraZeneca on Thursday, which has helped carry the FTSE to these new highs.

‘The market’s also reacting to the news that consumer confidence has improved slightly, according to data from GfK. Anglo American has also rejected BHP’s surprise takeover bid, deeming the multi-billion pound offer as unattractive.

‘The proposed deal would hugely reshape the business, and the Anglo board has suggested the current bid isn’t reflective of the opportunity. There’s every chance BHP will come back to the table, and these conversations will remain the core cause of market reactions for both groups.’

Private equity firm Thoma Bravo has agreed to buy British cybersecurity firm Darktrace for about $5.32billion in cash.

The agreed price of $7.75, or around 620p per share represents a 44 per cent premium to Darktrace’s average share price in the three months to Thursday Thoma Bravo said.

Shares in the company jumped 16 per cent after the announcement to 601 pence.

John Moore, senior investment manager at RBC Brewin Dolphin:

‘Like its peers, NatWest has seen profits fall – but it has still beaten expectations in a more competitive mortgage market and peaking interest rates environment.

‘Costs are stable and returns on equity remain high – albeit, not where they were a year ago. Unlike Lloyds and Barclays, NatWest doesn’t have to deal with legacy car finance and investment banking issues, so the bank has those advantages on its side along with its more streamlined business model.

‘The key, as ever, is the sale of the government’s stake, which should be addressed in the near future, and NatWest is in a positive position going into that process.’

The boss of the company that owns London’s stock market is set to become one of the highest paid Footsie chief executives despite the crisis engulfing the exchange.

Some 89 per cent of London Stock Exchange Group (LSEG) shareholders voted in favour of more than doubling David Schwimmer’s maximum package from £6.25million to £13million.

British companies have been labelled ‘sitting ducks’ as foreign predators hunt takeover bargains in London.

The swoop on Anglo American – the second FTSE 100 firm to receive a takeover bid this year – has sparked speculation over which company will be next.

City analysts think vulnerable blue-chip stocks include BP, Unilever, BP, Reckitt Benckiser, Standard Chartered, Entain and Burberry, (whose values are listed above).

FTSE 100 education company Pearson has posted a 3 per cent rise in adjusted underlying sales for the first quarter, with the firm expecting growth to accelerate in the second half.

English Language Learning sales led growth after expanding 22 per cent, ‘with inflationary pricing in Argentina having a positive impact which will dissipate through the year as comparative FX rates normalise’.

Pearson boss Omar Abbosh said:

‘The year has started well. Financial performance was in line with our expectations, thanks to strong execution across the business, and we maintain a sharp focus on delivering against the priorities that I outlined.

‘The year is unfolding as we anticipated, and we continue to expect an acceleration of growth in the second half, which will see us achieve our guidance for the full year.

‘We look forward to providing an update on our strategic progress with our half year results in July.’

More than £100billion was wiped off the value of Meta as fears mount over the Facebook owner’s huge spending on artificial intelligence (AI).

Shares in the company, which also owns Instagram and Whats- App, fell 10.6 per cent in New York after it said expenses would be higher than previously forecast.

That wiped £105billion off Meta’s value. In an update on Tuesday, the group said it will fork out as much as £32billion in 2024 – up from a previous forecast of £30billion.

NatWest profits fell by a less than expected 27 per cent in the first three months of 2024, with the lender hit by competition for savings, lending and mortgage products squeezing margins across the sector.

The British bank said pre-tax operating profit for the January-March period was £1.3billion, down from £1.8billion a year earlier and just above the average of analyst forecasts of £1.2billion.

Chief executive, Paul Thwaite, said:

‘Our performance is grounded in the vital role we play in the economy and in the lives of our 19 million customers. Though macro-uncertainty continues, customer confidence and activity is improving, with both lending(1) and deposits up in the quarter and impairments remaining low, reflecting our well-diversified business.

‘We are ambitious for this bank, and by succeeding for our customers, we will succeed for our shareholders. Our first priority is delivering disciplined growth across our three businesses by serving our customers well. At the same time, we are becoming simpler, more productive and easier to deal with.

‘As a result, we aim to generate returns that allow us to support our customers, invest in our business and deliver attractive distributions to shareholders.

‘We are also pleased with the recent momentum in the reduction of HM Treasury’s stake in the bank. Returning NatWest Group to private ownership is a shared ambition and we believe it is in the best interests of both the bank and all our shareholders.’

Anglo American has rejected rival BHP Group’s £31.1billion takeover proposal, which the London-listed miner said significantly undervalued the company and its future prospects.

Stuart Chambers, chairman of Anglo American, said:

‘Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends.

‘With copper representing 30% of Anglo American’s total production, and with the benefit of well-sequenced and value-accretive growth options in copper and other structurally attractive products, the Board believes that Anglo American’s shareholders stand to benefit from what we expect to be significant value appreciation as the full impact of those trends materialises.

‘The BHP proposal is opportunistic and fails to value Anglo American’s prospects, while significantly diluting the relative value upside participation of Anglo American’s shareholders relative to BHP’s shareholders.

‘The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk borne almost entirely by Anglo American, its shareholders and its other stakeholders.

‘Anglo American has defined clear strategic priorities – of operational excellence, portfolio, and growth – to deliver full value potential and is entirely focused on that delivery.’